Correlation Between Berkshire Hathaway and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Wilmington Capital 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 Wilmington Capital 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 Wilmington Capital Management, you can compare the effects of market volatilities on Berkshire Hathaway and Wilmington Capital 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 Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Wilmington Capital.
Diversification Opportunities for Berkshire Hathaway and Wilmington Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Berkshire and Wilmington is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Wilmington Capital go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Wilmington Capital
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to generate 0.29 times more return on investment than Wilmington Capital. However, Berkshire Hathaway CDR is 3.49 times less risky than Wilmington Capital. It trades about -0.12 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about -0.3 per unit of risk. If you would invest 3,532 in Berkshire Hathaway CDR on September 15, 2024 and sell it today you would lose (78.00) from holding Berkshire Hathaway CDR or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Wilmington Capital Management
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Wilmington Capital |
Berkshire Hathaway and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Wilmington Capital
The main advantage of trading using opposite Berkshire Hathaway and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Wilmington Capital 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 Wilmington Capital will offset losses from the drop in Wilmington Capital'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 |
| Wilmington Capital vs. Berkshire Hathaway CDR | Wilmington Capital vs. E L Financial Corp | Wilmington Capital vs. E L Financial 3 | Wilmington Capital 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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