Correlation Between Berkshire Hathaway and Hewlett Packard
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Hewlett Packard 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 Hewlett Packard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Hewlett Packard Enterprise, you can compare the effects of market volatilities on Berkshire Hathaway and Hewlett Packard 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 Hewlett Packard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Hewlett Packard.
Diversification Opportunities for Berkshire Hathaway and Hewlett Packard
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Hewlett is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Hewlett Packard Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hewlett Packard Ente 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 Hewlett Packard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hewlett Packard Ente has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Hewlett Packard go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Hewlett Packard
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.94 times more return on investment than Hewlett Packard. However, Berkshire Hathaway is 1.06 times less risky than Hewlett Packard. It trades about 0.32 of its potential returns per unit of risk. Hewlett Packard Enterprise is currently generating about -0.21 per unit of risk. If you would invest 47,235 in Berkshire Hathaway on December 1, 2024 and sell it today you would earn a total of 4,148 from holding Berkshire Hathaway or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Hewlett Packard Enterprise
Performance |
| Timeline |
| Berkshire Hathaway |
| Hewlett Packard Ente |
Berkshire Hathaway and Hewlett Packard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Hewlett Packard
The main advantage of trading using opposite Berkshire Hathaway and Hewlett Packard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Hewlett Packard 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 Hewlett Packard will offset losses from the drop in Hewlett Packard'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 |
| Hewlett Packard vs. Todos Medical | Hewlett Packard vs. Broadleaf Co | Hewlett Packard vs. Nexstar Broadcasting Group | Hewlett Packard vs. 51Talk Online Education |
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 CEOs Directory module to screen CEOs from public companies around the world.
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