Correlation Between Berkshire Hathaway and Premium Income
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Premium Income 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 Premium Income 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 Premium Income, you can compare the effects of market volatilities on Berkshire Hathaway and Premium Income 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 Premium Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Premium Income.
Diversification Opportunities for Berkshire Hathaway and Premium Income
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Premium is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Premium Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Income 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 Premium Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Income has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Premium Income go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Premium Income
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to generate 1.01 times more return on investment than Premium Income. However, Berkshire Hathaway is 1.01 times more volatile than Premium Income. It trades about 0.34 of its potential returns per unit of risk. Premium Income is currently generating about -0.31 per unit of risk. If you would invest 3,501 in Berkshire Hathaway CDR on December 4, 2024 and sell it today you would earn a total of 314.00 from holding Berkshire Hathaway CDR or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Premium Income
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Premium Income |
Berkshire Hathaway and Premium Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Premium Income
The main advantage of trading using opposite Berkshire Hathaway and Premium Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Premium Income 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 Premium Income will offset losses from the drop in Premium Income's long position.| Berkshire Hathaway vs. Excellon Resources | Berkshire Hathaway vs. Silver Bear Resources | Berkshire Hathaway vs. Condor Energies | Berkshire Hathaway vs. Entree Resources |
| Premium Income vs. Sprott Physical Gold | Premium Income vs. Brompton Split Banc | Premium Income vs. TDb Split Corp | Premium Income vs. Prime Dividend Corp |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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