Correlation Between Berkshire Hathaway and GOLDMAN SACHS
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and GOLDMAN SACHS 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 GOLDMAN SACHS 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 GOLDMAN SACHS CDR, you can compare the effects of market volatilities on Berkshire Hathaway and GOLDMAN SACHS 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 GOLDMAN SACHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and GOLDMAN SACHS.
Diversification Opportunities for Berkshire Hathaway and GOLDMAN SACHS
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and GOLDMAN is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and GOLDMAN SACHS CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDMAN SACHS CDR 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 GOLDMAN SACHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDMAN SACHS CDR has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and GOLDMAN SACHS go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and GOLDMAN SACHS
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.37 times less return on investment than GOLDMAN SACHS. But when comparing it to its historical volatility, Berkshire Hathaway CDR is 1.77 times less risky than GOLDMAN SACHS. It trades about 0.1 of its potential returns per unit of risk. GOLDMAN SACHS CDR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,796 in GOLDMAN SACHS CDR on September 3, 2024 and sell it today you would earn a total of 1,255 from holding GOLDMAN SACHS CDR or generate 69.88% 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. GOLDMAN SACHS CDR
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| GOLDMAN SACHS CDR |
Berkshire Hathaway and GOLDMAN SACHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and GOLDMAN SACHS
The main advantage of trading using opposite Berkshire Hathaway and GOLDMAN SACHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, GOLDMAN SACHS 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 GOLDMAN SACHS will offset losses from the drop in GOLDMAN SACHS's long position.| Berkshire Hathaway vs. Converge Technology Solutions | Berkshire Hathaway vs. Constellation Software | Berkshire Hathaway vs. Questor Technology | Berkshire Hathaway vs. Osisko Metals |
| GOLDMAN SACHS vs. MAG Silver Corp | GOLDMAN SACHS vs. Electra Battery Materials | GOLDMAN SACHS vs. Marimaca Copper Corp | GOLDMAN SACHS vs. Monument Mining Limited |
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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