Correlation Between Berkshire Hathaway and Sierra Madre
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Sierra Madre 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 Sierra Madre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Sierra Madre Gold, you can compare the effects of market volatilities on Berkshire Hathaway and Sierra Madre 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 Sierra Madre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Sierra Madre.
Diversification Opportunities for Berkshire Hathaway and Sierra Madre
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Sierra is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Sierra Madre Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Madre Gold 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 Sierra Madre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Madre Gold has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Sierra Madre go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Sierra Madre
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.2 times more return on investment than Sierra Madre. However, Berkshire Hathaway is 4.91 times less risky than Sierra Madre. It trades about 0.1 of its potential returns per unit of risk. Sierra Madre Gold is currently generating about -0.13 per unit of risk. If you would invest 46,026 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 2,282 from holding Berkshire Hathaway or generate 4.96% 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. Sierra Madre Gold
Performance |
| Timeline |
| Berkshire Hathaway |
| Sierra Madre Gold |
Berkshire Hathaway and Sierra Madre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Sierra Madre
The main advantage of trading using opposite Berkshire Hathaway and Sierra Madre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Sierra Madre 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 Sierra Madre will offset losses from the drop in Sierra Madre'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 |
| Sierra Madre vs. Equity Metals | Sierra Madre vs. Silver Wolf Exploration | Sierra Madre vs. Western Alaska Minerals | Sierra Madre vs. Summa Silver Corp |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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