Correlation Between Berkshire Hathaway and Pembina Pipeline
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Pembina Pipeline 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 Pembina Pipeline 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 Pembina Pipeline Corp, you can compare the effects of market volatilities on Berkshire Hathaway and Pembina Pipeline 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 Pembina Pipeline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Pembina Pipeline.
Diversification Opportunities for Berkshire Hathaway and Pembina Pipeline
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and Pembina is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Pembina Pipeline Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembina Pipeline Corp 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 Pembina Pipeline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembina Pipeline Corp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Pembina Pipeline go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Pembina Pipeline
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.24 times less return on investment than Pembina Pipeline. In addition to that, Berkshire Hathaway is 1.78 times more volatile than Pembina Pipeline Corp. It trades about 0.11 of its total potential returns per unit of risk. Pembina Pipeline Corp is currently generating about 0.24 per unit of volatility. If you would invest 2,255 in Pembina Pipeline Corp on October 29, 2024 and sell it today you would earn a total of 65.00 from holding Pembina Pipeline Corp or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Pembina Pipeline Corp
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Pembina Pipeline Corp |
Berkshire Hathaway and Pembina Pipeline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Pembina Pipeline
The main advantage of trading using opposite Berkshire Hathaway and Pembina Pipeline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Pembina Pipeline 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 Pembina Pipeline will offset losses from the drop in Pembina Pipeline's long position.| Berkshire Hathaway vs. Partners Value Investments | Berkshire Hathaway vs. Bird Construction | Berkshire Hathaway vs. SalesforceCom CDR | Berkshire Hathaway vs. Costco Wholesale Corp |
| Pembina Pipeline vs. Sparx Technology | Pembina Pipeline vs. Western Investment | Pembina Pipeline vs. Canadian General Investments | Pembina Pipeline vs. Canaf Investments |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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