Correlation Between Berkshire Hathaway and WEC Energy
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and WEC Energy 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 WEC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and WEC Energy Group, you can compare the effects of market volatilities on Berkshire Hathaway and WEC Energy 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 WEC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and WEC Energy.
Diversification Opportunities for Berkshire Hathaway and WEC Energy
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Berkshire and WEC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and WEC Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEC Energy Group 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 WEC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEC Energy Group has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and WEC Energy go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and WEC Energy
Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the WEC Energy. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.54 times less risky than WEC Energy. The stock trades about -0.04 of its potential returns per unit of risk. The WEC Energy Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,983 in WEC Energy Group on September 12, 2024 and sell it today you would earn a total of 157.00 from holding WEC Energy Group or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. WEC Energy Group
Performance |
| Timeline |
| Berkshire Hathaway |
| WEC Energy Group |
Berkshire Hathaway and WEC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and WEC Energy
The main advantage of trading using opposite Berkshire Hathaway and WEC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, WEC Energy 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 WEC Energy will offset losses from the drop in WEC Energy's long position.| Berkshire Hathaway vs. Zurich Insurance Group | Berkshire Hathaway vs. Superior Plus Corp | Berkshire Hathaway vs. SIVERS SEMICONDUCTORS AB | Berkshire Hathaway vs. CHINA HUARONG ENERHD 50 |
| WEC Energy vs. Nippon Steel | WEC Energy vs. ALGOMA STEEL GROUP | WEC Energy vs. ITALIAN WINE BRANDS | WEC Energy vs. RELIANCE STEEL AL |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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