Correlation Between Berkshire Hathaway and LAir Liquide
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and LAir Liquide 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 LAir Liquide into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and LAir Liquide SA, you can compare the effects of market volatilities on Berkshire Hathaway and LAir Liquide 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 LAir Liquide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and LAir Liquide.
Diversification Opportunities for Berkshire Hathaway and LAir Liquide
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and LAir is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and LAir Liquide SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LAir Liquide SA 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 LAir Liquide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LAir Liquide SA has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and LAir Liquide go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and LAir Liquide
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.65 times more return on investment than LAir Liquide. However, Berkshire Hathaway is 1.54 times less risky than LAir Liquide. It trades about 0.11 of its potential returns per unit of risk. LAir Liquide SA is currently generating about 0.05 per unit of risk. If you would invest 30,639 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 17,669 from holding Berkshire Hathaway or generate 57.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Berkshire Hathaway vs. LAir Liquide SA
Performance |
Timeline |
Berkshire Hathaway |
LAir Liquide SA |
Berkshire Hathaway and LAir Liquide Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Berkshire Hathaway and LAir Liquide
The main advantage of trading using opposite Berkshire Hathaway and LAir Liquide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, LAir Liquide 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 LAir Liquide will offset losses from the drop in LAir Liquide'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 |
LAir Liquide vs. Akzo Nobel NV | LAir Liquide vs. Avoca LLC | LAir Liquide vs. Arkema SA ADR | LAir Liquide vs. HUMANA INC |
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.
Other Complementary Tools
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
Money Managers Screen money managers from public funds and ETFs managed around the world |