Correlation Between Berkshire Hathaway and Celestica
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Celestica 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 Celestica 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 Celestica, you can compare the effects of market volatilities on Berkshire Hathaway and Celestica 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 Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Celestica.
Diversification Opportunities for Berkshire Hathaway and Celestica
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Berkshire and Celestica is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Celestica go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Celestica
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 3.32 times less return on investment than Celestica. But when comparing it to its historical volatility, Berkshire Hathaway CDR is 2.23 times less risky than Celestica. It trades about 0.19 of its potential returns per unit of risk. Celestica is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,736 in Celestica on August 30, 2024 and sell it today you would earn a total of 1,934 from holding Celestica or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Celestica
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Celestica |
Berkshire Hathaway and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Celestica
The main advantage of trading using opposite Berkshire Hathaway and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| Berkshire Hathaway vs. Condor Energies | Berkshire Hathaway vs. iShares Canadian HYBrid | Berkshire Hathaway vs. Altagas Cum Red | Berkshire Hathaway vs. European Residential Real |
| Celestica vs. Descartes Systems Group | Celestica vs. CAE Inc | Celestica vs. CGI Inc | Celestica vs. Cogeco Communications |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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