Correlation Between Canadian Imperial and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Canadian Imperial and Berkshire Hathaway 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 Canadian Imperial and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Imperial Bank and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Canadian Imperial and Berkshire Hathaway 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 Canadian Imperial with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Imperial and Berkshire Hathaway.
Diversification Opportunities for Canadian Imperial and Berkshire Hathaway
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and Berkshire is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Imperial Bank and Berkshire Hathaway CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway CDR and Canadian Imperial 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 Canadian Imperial Bank are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway CDR has no effect on the direction of Canadian Imperial i.e., Canadian Imperial and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Canadian Imperial and Berkshire Hathaway
Assuming the 90 days trading horizon Canadian Imperial is expected to generate 1.23 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Canadian Imperial Bank is 1.26 times less risky than Berkshire Hathaway. It trades about 0.09 of its potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,348 in Berkshire Hathaway CDR on September 16, 2024 and sell it today you would earn a total of 1,106 from holding Berkshire Hathaway CDR or generate 47.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Imperial Bank vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| Canadian Imperial Bank |
| Berkshire Hathaway CDR |
Canadian Imperial and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Imperial and Berkshire Hathaway
The main advantage of trading using opposite Canadian Imperial and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Imperial position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Canadian Imperial vs. Enbridge Pref 5 | Canadian Imperial vs. Enbridge Pref 11 | Canadian Imperial vs. E Split Corp | Canadian Imperial vs. E Split Corp |
| Berkshire Hathaway vs. Canadian Imperial Bank | Berkshire Hathaway vs. Fairfax Financial Holdings | Berkshire Hathaway vs. iA Financial | Berkshire Hathaway vs. VersaBank |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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