Correlation Between Berkshire Hathaway and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Reckitt Benckiser 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 Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Reckitt Benckiser Group, you can compare the effects of market volatilities on Berkshire Hathaway and Reckitt Benckiser 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 Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Reckitt Benckiser.
Diversification Opportunities for Berkshire Hathaway and Reckitt Benckiser
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Reckitt is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser 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 Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Reckitt Benckiser
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.45 times more return on investment than Reckitt Benckiser. However, Berkshire Hathaway is 2.23 times less risky than Reckitt Benckiser. It trades about 0.14 of its potential returns per unit of risk. Reckitt Benckiser Group is currently generating about -0.03 per unit of risk. If you would invest 45,849 in Berkshire Hathaway on August 28, 2024 and sell it today you would earn a total of 1,894 from holding Berkshire Hathaway or generate 4.13% 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. Reckitt Benckiser Group
Performance |
| Timeline |
| Berkshire Hathaway |
| Reckitt Benckiser |
Berkshire Hathaway and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Reckitt Benckiser
The main advantage of trading using opposite Berkshire Hathaway and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser'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 |
| Reckitt Benckiser vs. Church Dwight | Reckitt Benckiser vs. Kimberly Clark de Mexico | Reckitt Benckiser vs. LOreal Co ADR | Reckitt Benckiser vs. Shiseido Company |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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