Correlation Between Berkshire Hathaway and Brompton Lifeco
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Brompton Lifeco 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 Brompton Lifeco 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 Brompton Lifeco Split, you can compare the effects of market volatilities on Berkshire Hathaway and Brompton Lifeco 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 Brompton Lifeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Brompton Lifeco.
Diversification Opportunities for Berkshire Hathaway and Brompton Lifeco
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and Brompton is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Brompton Lifeco Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton Lifeco Split 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 Brompton Lifeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton Lifeco Split has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Brompton Lifeco go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Brompton Lifeco
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Brompton Lifeco. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 1.45 times less risky than Brompton Lifeco. The stock trades about -0.12 of its potential returns per unit of risk. The Brompton Lifeco Split is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,002 in Brompton Lifeco Split on September 15, 2024 and sell it today you would lose (8.00) from holding Brompton Lifeco Split or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Brompton Lifeco Split
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Brompton Lifeco Split |
Berkshire Hathaway and Brompton Lifeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Brompton Lifeco
The main advantage of trading using opposite Berkshire Hathaway and Brompton Lifeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Brompton Lifeco 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 Brompton Lifeco will offset losses from the drop in Brompton Lifeco's long position.| Berkshire Hathaway vs. Maple Peak Investments | Berkshire Hathaway vs. High Liner Foods | Berkshire Hathaway vs. Air Canada | Berkshire Hathaway vs. Rubicon Organics |
| Brompton Lifeco vs. Berkshire Hathaway CDR | Brompton Lifeco vs. E L Financial Corp | Brompton Lifeco vs. E L Financial 3 | Brompton Lifeco 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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