Correlation Between Berkshire Hathaway and Bayer AG
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Bayer AG 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 Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Bayer AG, you can compare the effects of market volatilities on Berkshire Hathaway and Bayer AG 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 Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Bayer AG.
Diversification Opportunities for Berkshire Hathaway and Bayer AG
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Bayer is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Bayer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG 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 Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Bayer AG go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Bayer AG
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.38 times more return on investment than Bayer AG. However, Berkshire Hathaway is 2.63 times less risky than Bayer AG. It trades about 0.03 of its potential returns per unit of risk. Bayer AG is currently generating about -0.22 per unit of risk. If you would invest 47,592 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 716.00 from holding Berkshire Hathaway or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Bayer AG
Performance |
| Timeline |
| Berkshire Hathaway |
| Bayer AG |
Berkshire Hathaway and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Bayer AG
The main advantage of trading using opposite Berkshire Hathaway and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG'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 |
| Bayer AG vs. Broadstone Net Lease | Bayer AG vs. Akanda Corp | Bayer AG vs. Alvotech | Bayer AG vs. Aquestive Therapeutics |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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