Correlation Between Berkshire Hathaway and Lumine
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Lumine 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 Lumine 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 Lumine Group, you can compare the effects of market volatilities on Berkshire Hathaway and Lumine 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 Lumine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Lumine.
Diversification Opportunities for Berkshire Hathaway and Lumine
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and Lumine is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Lumine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumine Group 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 Lumine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumine Group has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Lumine go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Lumine
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Lumine. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 2.75 times less risky than Lumine. The stock trades about -0.11 of its potential returns per unit of risk. The Lumine Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 4,183 in Lumine Group on September 14, 2024 and sell it today you would earn a total of 207.00 from holding Lumine Group or generate 4.95% 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. Lumine Group
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Lumine Group |
Berkshire Hathaway and Lumine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Lumine
The main advantage of trading using opposite Berkshire Hathaway and Lumine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Lumine 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 Lumine will offset losses from the drop in Lumine'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 |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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