Correlation Between Berkshire Hathaway and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Berkshire Hathaway and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Restaurant Brands.
Diversification Opportunities for Berkshire Hathaway and Restaurant Brands
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Berkshire and Restaurant is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Restaurant Brands go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Restaurant Brands
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to generate 0.69 times more return on investment than Restaurant Brands. However, Berkshire Hathaway CDR is 1.44 times less risky than Restaurant Brands. It trades about 0.11 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.01 per unit of risk. If you would invest 2,586 in Berkshire Hathaway CDR on August 31, 2024 and sell it today you would earn a total of 1,069 from holding Berkshire Hathaway CDR or generate 41.34% 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. Restaurant Brands Internationa
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Restaurant Brands |
Berkshire Hathaway and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Restaurant Brands
The main advantage of trading using opposite Berkshire Hathaway and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Berkshire Hathaway vs. iShares Canadian HYBrid | Berkshire Hathaway vs. Brompton European Dividend | Berkshire Hathaway vs. Solar Alliance Energy | Berkshire Hathaway vs. PHN Multi Style All Cap |
| Restaurant Brands vs. Canadian Tire | Restaurant Brands vs. Dollarama | Restaurant Brands vs. Nutrien | Restaurant Brands vs. Magna International |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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