Correlation Between Berkshire Hathaway and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Hartford Financial 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 Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Hartford Financial Services, you can compare the effects of market volatilities on Berkshire Hathaway and Hartford Financial 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 Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Hartford Financial.
Diversification Opportunities for Berkshire Hathaway and Hartford Financial
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Hartford is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Hartford Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Financial 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 Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Financial has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Hartford Financial go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Hartford Financial
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.7 times more return on investment than Hartford Financial. However, Berkshire Hathaway is 1.42 times less risky than Hartford Financial. It trades about 0.08 of its potential returns per unit of risk. Hartford Financial Services is currently generating about 0.01 per unit of risk. If you would invest 46,061 in Berkshire Hathaway on August 24, 2024 and sell it today you would earn a total of 1,145 from holding Berkshire Hathaway or generate 2.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Hartford Financial Services
Performance |
| Timeline |
| Berkshire Hathaway |
| Hartford Financial |
Berkshire Hathaway and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Hartford Financial
The main advantage of trading using opposite Berkshire Hathaway and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Hartford Financial 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 Hartford Financial will offset losses from the drop in Hartford Financial'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 |
| Hartford Financial vs. Goosehead Insurance | Hartford Financial vs. International General Insurance | Hartford Financial vs. Enstar Group Limited | Hartford Financial vs. Arch Capital Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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