Correlation Between Berkshire Hathaway and Gabelli Equity
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Gabelli Equity 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 Gabelli Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and The Gabelli Equity, you can compare the effects of market volatilities on Berkshire Hathaway and Gabelli Equity 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 Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Gabelli Equity.
Diversification Opportunities for Berkshire Hathaway and Gabelli Equity
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Gabelli is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity 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 Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Gabelli Equity go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Gabelli Equity
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 1.66 times more return on investment than Gabelli Equity. However, Berkshire Hathaway is 1.66 times more volatile than The Gabelli Equity. It trades about 0.14 of its potential returns per unit of risk. The Gabelli Equity is currently generating about -0.06 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. The Gabelli Equity
Performance |
| Timeline |
| Berkshire Hathaway |
| Gabelli Equity |
Berkshire Hathaway and Gabelli Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Gabelli Equity
The main advantage of trading using opposite Berkshire Hathaway and Gabelli Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Gabelli Equity 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 Gabelli Equity will offset losses from the drop in Gabelli Equity'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 |
| Gabelli Equity vs. The Gabelli Multimedia | Gabelli Equity vs. The Gabelli Multimedia | Gabelli Equity vs. The Gabelli Dividend | Gabelli Equity vs. The Gabelli Equity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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