Correlation Between Berkshire Hathaway and Graphene Manufacturing
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Graphene Manufacturing 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 Graphene Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Graphene Manufacturing Group, you can compare the effects of market volatilities on Berkshire Hathaway and Graphene Manufacturing 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 Graphene Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Graphene Manufacturing.
Diversification Opportunities for Berkshire Hathaway and Graphene Manufacturing
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Graphene is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Graphene Manufacturing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Manufacturing 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 Graphene Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphene Manufacturing has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Graphene Manufacturing go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Graphene Manufacturing
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 2.04 times less return on investment than Graphene Manufacturing. But when comparing it to its historical volatility, Berkshire Hathaway is 5.88 times less risky than Graphene Manufacturing. It trades about 0.12 of its potential returns per unit of risk. Graphene Manufacturing Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Graphene Manufacturing Group on August 31, 2024 and sell it today you would earn a total of 4.00 from holding Graphene Manufacturing Group or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Berkshire Hathaway vs. Graphene Manufacturing Group
Performance |
| Timeline |
| Berkshire Hathaway |
| Graphene Manufacturing |
Berkshire Hathaway and Graphene Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Graphene Manufacturing
The main advantage of trading using opposite Berkshire Hathaway and Graphene Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Graphene Manufacturing 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 Graphene Manufacturing will offset losses from the drop in Graphene Manufacturing'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 |
| Graphene Manufacturing vs. Iofina plc | Graphene Manufacturing vs. Nano One Materials | Graphene Manufacturing vs. Gevo Inc | Graphene Manufacturing vs. Haydale Graphene Industries |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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