Correlation Between Fundamental Global and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Fundamental Global 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 Fundamental Global and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fundamental Global and Berkshire Hathaway, you can compare the effects of market volatilities on Fundamental Global 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 Fundamental Global with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fundamental Global and Berkshire Hathaway.
Diversification Opportunities for Fundamental Global and Berkshire Hathaway
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fundamental and Berkshire is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Global and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Fundamental Global 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 Fundamental Global 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 Fundamental Global i.e., Fundamental Global and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Fundamental Global and Berkshire Hathaway
Considering the 90-day investment horizon Fundamental Global is expected to under-perform the Berkshire Hathaway. In addition to that, Fundamental Global is 9.73 times more volatile than Berkshire Hathaway. It trades about -0.17 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about -0.25 per unit of volatility. If you would invest 47,220 in Berkshire Hathaway on September 18, 2024 and sell it today you would lose (1,654) from holding Berkshire Hathaway or give up 3.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fundamental Global vs. Berkshire Hathaway
Performance |
| Timeline |
| Fundamental Global |
| Berkshire Hathaway |
Fundamental Global and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fundamental Global and Berkshire Hathaway
The main advantage of trading using opposite Fundamental Global and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Global 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.| Fundamental Global vs. International General Insurance | Fundamental Global vs. BB Seguridade Participacoes | Fundamental Global vs. Goosehead Insurance | Fundamental Global vs. Enstar Group Limited |
| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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