Correlation Between Berkshire Hathaway and Aegon NV
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Aegon NV 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 Aegon NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Aegon NV ADR, you can compare the effects of market volatilities on Berkshire Hathaway and Aegon NV 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 Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Aegon NV.
Diversification Opportunities for Berkshire Hathaway and Aegon NV
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Berkshire and Aegon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Aegon NV go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Aegon NV
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.99 times more return on investment than Aegon NV. However, Berkshire Hathaway is 1.01 times less risky than Aegon NV. It trades about 0.08 of its potential returns per unit of risk. Aegon NV ADR is currently generating about -0.06 per unit of risk. If you would invest 46,061 in Berkshire Hathaway on August 24, 2024 and sell it today you would earn a total of 1,145 from holding Berkshire Hathaway or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Aegon NV ADR
Performance |
| Timeline |
| Berkshire Hathaway |
| Aegon NV ADR |
Berkshire Hathaway and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Aegon NV
The main advantage of trading using opposite Berkshire Hathaway and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
| Aegon NV vs. Hartford Financial Services | Aegon NV vs. Goosehead Insurance | Aegon NV vs. International General Insurance | Aegon NV vs. Enstar Group Limited |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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