Correlation Between Berkshire Hathaway and CI Financial
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and CI 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 CI Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway CDR and CI Financial Corp, you can compare the effects of market volatilities on Berkshire Hathaway and CI 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 CI Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and CI Financial.
Diversification Opportunities for Berkshire Hathaway and CI Financial
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and CIX is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and CI Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Financial Corp 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 CDR are associated (or correlated) with CI Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Financial Corp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and CI Financial go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and CI Financial
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the CI Financial. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 7.95 times less risky than CI Financial. The stock trades about -0.11 of its potential returns per unit of risk. The CI Financial Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,340 in CI Financial Corp on September 14, 2024 and sell it today you would earn a total of 762.00 from holding CI Financial Corp or generate 32.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. CI Financial Corp
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| CI Financial Corp |
Berkshire Hathaway and CI Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and CI Financial
The main advantage of trading using opposite Berkshire Hathaway and CI Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, CI 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 CI Financial will offset losses from the drop in CI Financial's long position.| Berkshire Hathaway vs. American Hotel Income | Berkshire Hathaway vs. Electra Battery Materials | Berkshire Hathaway vs. Economic Investment Trust | Berkshire Hathaway vs. Falcon Energy Materials |
| CI Financial vs. Berkshire Hathaway CDR | CI Financial vs. E L Financial Corp | CI Financial vs. E L Financial 3 | CI Financial vs. Molson Coors Canada |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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