Correlation Between Berkshire Hathaway and HOME DEPOT
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and HOME DEPOT 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 HOME DEPOT 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 HOME DEPOT CDR, you can compare the effects of market volatilities on Berkshire Hathaway and HOME DEPOT 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 HOME DEPOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and HOME DEPOT.
Diversification Opportunities for Berkshire Hathaway and HOME DEPOT
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Berkshire and HOME is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and HOME DEPOT CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT 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 HOME DEPOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT CDR has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and HOME DEPOT go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and HOME DEPOT
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 5.34 times less return on investment than HOME DEPOT. But when comparing it to its historical volatility, Berkshire Hathaway CDR is 1.09 times less risky than HOME DEPOT. It trades about 0.04 of its potential returns per unit of risk. HOME DEPOT CDR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,402 in HOME DEPOT CDR on August 28, 2024 and sell it today you would earn a total of 364.00 from holding HOME DEPOT CDR or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. HOME DEPOT CDR
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| HOME DEPOT CDR |
Berkshire Hathaway and HOME DEPOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and HOME DEPOT
The main advantage of trading using opposite Berkshire Hathaway and HOME DEPOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, HOME DEPOT 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 HOME DEPOT will offset losses from the drop in HOME DEPOT's long position.| Berkshire Hathaway vs. NVIDIA CDR | Berkshire Hathaway vs. Apple Inc CDR | Berkshire Hathaway vs. Microsoft Corp CDR | Berkshire Hathaway vs. Amazon CDR |
| HOME DEPOT vs. Arbor Metals Corp | HOME DEPOT vs. Marimaca Copper Corp | HOME DEPOT vs. Data Communications Management | HOME DEPOT vs. Diamond Estates Wines |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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