Correlation Between Berkshire Hathaway and Dow Jones
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By analyzing existing cross correlation between Berkshire Hathaway and Dow Jones Industrial, you can compare the effects of market volatilities on Berkshire Hathaway and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Dow Jones.
Diversification Opportunities for Berkshire Hathaway and Dow Jones
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Berkshire and Dow is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Dow Jones go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Dow Jones
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.41 times more return on investment than Dow Jones. However, Berkshire Hathaway is 1.41 times more volatile than Dow Jones Industrial. It trades about 0.11 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 31,160 in Berkshire Hathaway on August 31, 2024 and sell it today you would earn a total of 14,980 from holding Berkshire Hathaway or generate 48.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Berkshire Hathaway vs. Dow Jones Industrial
Performance |
| Timeline |
Berkshire Hathaway and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Berkshire Hathaway
Pair trading matchups for Berkshire Hathaway
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Berkshire Hathaway and Dow Jones
The main advantage of trading using opposite Berkshire Hathaway and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Berkshire Hathaway vs. Allianz SE VNA | Berkshire Hathaway vs. AXA SA | Berkshire Hathaway vs. Talanx AG | Berkshire Hathaway vs. UNIQA Insurance Group |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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