Correlation Between Berkshire Hathaway and Wartsila Oyj
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Wartsila Oyj at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Berkshire Hathaway and Wartsila Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Wartsila Oyj Abp, you can compare the effects of market volatilities on Berkshire Hathaway and Wartsila Oyj and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Berkshire Hathaway with a short position of Wartsila Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Wartsila Oyj.
Diversification Opportunities for Berkshire Hathaway and Wartsila Oyj
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Wartsila is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Wartsila Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wartsila Oyj Abp and Berkshire Hathaway is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Berkshire Hathaway are associated (or correlated) with Wartsila Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wartsila Oyj Abp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Wartsila Oyj go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Wartsila Oyj
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.19 times more return on investment than Wartsila Oyj. However, Berkshire Hathaway is 5.18 times less risky than Wartsila Oyj. It trades about -0.06 of its potential returns per unit of risk. Wartsila Oyj Abp is currently generating about -0.17 per unit of risk. If you would invest 70,022,400 in Berkshire Hathaway on September 12, 2024 and sell it today you would lose (560,400) from holding Berkshire Hathaway or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Wartsila Oyj Abp
Performance |
| Timeline |
| Berkshire Hathaway |
| Wartsila Oyj Abp |
Berkshire Hathaway and Wartsila Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Wartsila Oyj
The main advantage of trading using opposite Berkshire Hathaway and Wartsila Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Wartsila Oyj can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wartsila Oyj will offset losses from the drop in Wartsila Oyj's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
| Wartsila Oyj vs. Sandvik AB ADR | Wartsila Oyj vs. Rockwell Automation | Wartsila Oyj vs. Park Ohio Holdings | Wartsila Oyj vs. Gates Industrial |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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