Correlation Between DFS Furniture and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Berkshire Hathaway, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Berkshire Hathaway.
Diversification Opportunities for DFS Furniture and Berkshire Hathaway
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DFS and Berkshire is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and DFS Furniture 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 DFS Furniture PLC 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 has no effect on the direction of DFS Furniture i.e., DFS Furniture and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between DFS Furniture and Berkshire Hathaway
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 2.01 times more return on investment than Berkshire Hathaway. However, DFS Furniture is 2.01 times more volatile than Berkshire Hathaway. It trades about 0.09 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.13 per unit of risk. If you would invest 11,300 in DFS Furniture PLC on September 2, 2024 and sell it today you would earn a total of 2,600 from holding DFS Furniture PLC or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Berkshire Hathaway
Performance |
| Timeline |
| DFS Furniture PLC |
| Berkshire Hathaway |
DFS Furniture and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Berkshire Hathaway
The main advantage of trading using opposite DFS Furniture and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Infrastrutture Wireless Italiane | DFS Furniture vs. Odfjell Drilling | DFS Furniture vs. FC Investment Trust | DFS Furniture vs. Schroders Investment Trusts |
| Berkshire Hathaway vs. Zegona Communications Plc | Berkshire Hathaway vs. Oakley Capital Investments | Berkshire Hathaway vs. Aberdeen Diversified Income | Berkshire Hathaway vs. Monks Investment Trust |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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