Correlation Between Coca Cola and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Coca Cola 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 Coca Cola and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coca Cola FEMSA SAB and Berkshire Hathaway, you can compare the effects of market volatilities on Coca Cola 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 Coca Cola with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coca Cola and Berkshire Hathaway.
Diversification Opportunities for Coca Cola and Berkshire Hathaway
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Coca and Berkshire is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Coca Cola FEMSA SAB and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Coca Cola 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 Coca Cola FEMSA SAB 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 Coca Cola i.e., Coca Cola and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Coca Cola and Berkshire Hathaway
Assuming the 90 days trading horizon Coca Cola is expected to generate 7.51 times less return on investment than Berkshire Hathaway. In addition to that, Coca Cola is 1.06 times more volatile than Berkshire Hathaway. It trades about 0.02 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.18 per unit of volatility. If you would invest 719,300 in Berkshire Hathaway on September 3, 2024 and sell it today you would earn a total of 255,189 from holding Berkshire Hathaway or generate 35.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coca Cola FEMSA SAB vs. Berkshire Hathaway
Performance |
| Timeline |
| Coca Cola FEMSA |
| Berkshire Hathaway |
Coca Cola and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coca Cola and Berkshire Hathaway
The main advantage of trading using opposite Coca Cola and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coca Cola 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.| Coca Cola vs. Arca Continental SAB | Coca Cola vs. Wal Mart de Mxico | Coca Cola vs. Fomento Econmico Mexicano | Coca Cola vs. Orbia Advance |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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