Correlation Between Berkshire Hathaway and Amazon
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Amazon 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 Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Amazon Inc, you can compare the effects of market volatilities on Berkshire Hathaway and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Amazon.
Diversification Opportunities for Berkshire Hathaway and Amazon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Berkshire and Amazon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Amazon go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Amazon
If you would invest 349,900 in Amazon Inc on August 31, 2024 and sell it today you would earn a total of 73,329 from holding Amazon Inc or generate 20.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 1.64% |
| Values | Daily Returns |
Berkshire Hathaway vs. Amazon Inc
Performance |
| Timeline |
| Berkshire Hathaway |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Amazon Inc |
Berkshire Hathaway and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Amazon
The main advantage of trading using opposite Berkshire Hathaway and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| Berkshire Hathaway vs. Costco Wholesale | Berkshire Hathaway vs. UnitedHealth Group Incorporated | Berkshire Hathaway vs. DXC Technology | Berkshire Hathaway vs. Southern Copper |
| Amazon vs. Samsung Electronics Co | Amazon vs. Martin Marietta Materials | Amazon vs. Taiwan Semiconductor Manufacturing | Amazon vs. United States Steel |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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