Correlation Between GM and BERKSHIRE
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By analyzing existing cross correlation between General Motors and BERKSHIRE HATHAWAY ENERGY, you can compare the effects of market volatilities on GM and BERKSHIRE 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 GM with a short position of BERKSHIRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and BERKSHIRE.
Diversification Opportunities for GM and BERKSHIRE
Excellent diversification
The 3 months correlation between GM and BERKSHIRE is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and BERKSHIRE HATHAWAY ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BERKSHIRE HATHAWAY ENERGY and GM 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 General Motors are associated (or correlated) with BERKSHIRE. 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 ENERGY has no effect on the direction of GM i.e., GM and BERKSHIRE go up and down completely randomly.
Pair Corralation between GM and BERKSHIRE
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.97 times more return on investment than BERKSHIRE. However, General Motors is 1.03 times less risky than BERKSHIRE. It trades about 0.16 of its potential returns per unit of risk. BERKSHIRE HATHAWAY ENERGY is currently generating about 0.03 per unit of risk. If you would invest 5,096 in General Motors on September 2, 2024 and sell it today you would earn a total of 463.00 from holding General Motors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. BERKSHIRE HATHAWAY ENERGY
Performance |
| Timeline |
| General Motors |
| BERKSHIRE HATHAWAY ENERGY |
GM and BERKSHIRE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and BERKSHIRE
The main advantage of trading using opposite GM and BERKSHIRE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, BERKSHIRE 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 will offset losses from the drop in BERKSHIRE's long position.The idea behind General Motors and BERKSHIRE HATHAWAY ENERGY 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 vs. MGIC Investment Corp | BERKSHIRE vs. Nexstar Broadcasting Group | BERKSHIRE vs. Black Hills | BERKSHIRE vs. Western Asset Investment |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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