Correlation Between Berkshire Hathaway and Wajax
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Wajax 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 Wajax 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 Wajax, you can compare the effects of market volatilities on Berkshire Hathaway and Wajax 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 Wajax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Wajax.
Diversification Opportunities for Berkshire Hathaway and Wajax
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Wajax is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Wajax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wajax 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 Wajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wajax has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Wajax go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Wajax
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to generate 0.45 times more return on investment than Wajax. However, Berkshire Hathaway CDR is 2.24 times less risky than Wajax. It trades about 0.1 of its potential returns per unit of risk. Wajax is currently generating about 0.04 per unit of risk. If you would invest 2,422 in Berkshire Hathaway CDR on September 3, 2024 and sell it today you would earn a total of 1,233 from holding Berkshire Hathaway CDR or generate 50.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. Wajax
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| Wajax |
Berkshire Hathaway and Wajax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Wajax
The main advantage of trading using opposite Berkshire Hathaway and Wajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Wajax 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 Wajax will offset losses from the drop in Wajax's long position.| Berkshire Hathaway vs. Converge Technology Solutions | Berkshire Hathaway vs. Constellation Software | Berkshire Hathaway vs. Questor Technology | Berkshire Hathaway vs. Osisko Metals |
| Wajax vs. Russel Metals | Wajax vs. Bird Construction | Wajax vs. Finning International | Wajax vs. Mullen Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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