Correlation Between Berkshire Hathaway and EURODRY
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and EURODRY 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 EURODRY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and EURODRY LTD DL, you can compare the effects of market volatilities on Berkshire Hathaway and EURODRY 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 EURODRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and EURODRY.
Diversification Opportunities for Berkshire Hathaway and EURODRY
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and EURODRY is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and EURODRY LTD DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURODRY LTD DL 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 EURODRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURODRY LTD DL has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and EURODRY go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and EURODRY
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.54 times more return on investment than EURODRY. However, Berkshire Hathaway is 1.86 times less risky than EURODRY. It trades about 0.2 of its potential returns per unit of risk. EURODRY LTD DL is currently generating about -0.2 per unit of risk. If you would invest 42,060 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 3,640 from holding Berkshire Hathaway or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Berkshire Hathaway vs. EURODRY LTD DL
Performance |
| Timeline |
| Berkshire Hathaway |
| EURODRY LTD DL |
Berkshire Hathaway and EURODRY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and EURODRY
The main advantage of trading using opposite Berkshire Hathaway and EURODRY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, EURODRY 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 EURODRY will offset losses from the drop in EURODRY's long position.| Berkshire Hathaway vs. Wyndham Hotels Resorts | Berkshire Hathaway vs. Charter Communications | Berkshire Hathaway vs. Verizon Communications | Berkshire Hathaway vs. Spirent Communications plc |
| EURODRY vs. SEALED AIR | EURODRY vs. Ryanair Holdings plc | EURODRY vs. National Bank Holdings | EURODRY vs. Pentair plc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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