Correlation Between Berkshire Hathaway and ASOS Plc
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and ASOS Plc 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 ASOS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and ASOS plc PK, you can compare the effects of market volatilities on Berkshire Hathaway and ASOS Plc 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 ASOS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and ASOS Plc.
Diversification Opportunities for Berkshire Hathaway and ASOS Plc
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and ASOS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and ASOS plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASOS plc PK 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 ASOS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASOS plc PK has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and ASOS Plc go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and ASOS Plc
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.42 times more return on investment than ASOS Plc. However, Berkshire Hathaway is 2.4 times less risky than ASOS Plc. It trades about 0.14 of its potential returns per unit of risk. ASOS plc PK is currently generating about -0.1 per unit of risk. If you would invest 45,849 in Berkshire Hathaway on August 29, 2024 and sell it today you would earn a total of 2,007 from holding Berkshire Hathaway or generate 4.38% 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. ASOS plc PK
Performance |
| Timeline |
| Berkshire Hathaway |
| ASOS plc PK |
Berkshire Hathaway and ASOS Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and ASOS Plc
The main advantage of trading using opposite Berkshire Hathaway and ASOS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, ASOS Plc 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 ASOS Plc will offset losses from the drop in ASOS Plc'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 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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