Correlation Between Dollarama and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Dollarama 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 Dollarama and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dollarama and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Dollarama 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 Dollarama with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dollarama and Berkshire Hathaway.
Diversification Opportunities for Dollarama and Berkshire Hathaway
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dollarama and Berkshire is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dollarama 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 Dollarama 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 Dollarama 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 Dollarama i.e., Dollarama and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Dollarama and Berkshire Hathaway
Assuming the 90 days trading horizon Dollarama is expected to generate 1.4 times more return on investment than Berkshire Hathaway. However, Dollarama is 1.4 times more volatile than Berkshire Hathaway CDR. It trades about 0.1 of its potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.1 per unit of risk. If you would invest 8,052 in Dollarama on September 2, 2024 and sell it today you would earn a total of 6,532 from holding Dollarama or generate 81.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dollarama vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| Dollarama |
| Berkshire Hathaway CDR |
Dollarama and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dollarama and Berkshire Hathaway
The main advantage of trading using opposite Dollarama and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dollarama 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.| Dollarama vs. Canadian Tire | Dollarama vs. Loblaw Companies Limited | Dollarama vs. Metro Inc | Dollarama vs. Canadian National Railway |
| Berkshire Hathaway vs. Dream Office Real | Berkshire Hathaway vs. Aya Gold Silver | Berkshire Hathaway vs. Bird Construction | Berkshire Hathaway vs. Metalero Mining Corp |
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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