Correlation Between Emera and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Emera 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 Emera and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emera Inc and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Emera 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 Emera with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emera and Berkshire Hathaway.
Diversification Opportunities for Emera and Berkshire Hathaway
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Emera and Berkshire is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Emera Inc 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 Emera 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 Emera Inc 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 Emera i.e., Emera and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Emera and Berkshire Hathaway
Assuming the 90 days trading horizon Emera Inc is expected to generate 1.05 times more return on investment than Berkshire Hathaway. However, Emera is 1.05 times more volatile than Berkshire Hathaway CDR. It trades about 0.27 of its potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about -0.08 per unit of risk. If you would invest 2,271 in Emera Inc on September 12, 2024 and sell it today you would earn a total of 118.00 from holding Emera Inc or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emera Inc vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| Emera Inc |
| Berkshire Hathaway CDR |
Emera and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emera and Berkshire Hathaway
The main advantage of trading using opposite Emera and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emera 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.The idea behind Emera Inc and Berkshire Hathaway CDR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Berkshire Hathaway vs. Broadcom | Berkshire Hathaway vs. Forsys Metals Corp | Berkshire Hathaway vs. Lion One Metals | Berkshire Hathaway vs. NeXGold 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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