Correlation Between Laurentian Bank and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Laurentian Bank 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 Laurentian Bank and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laurentian Bank and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Laurentian Bank 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 Laurentian Bank with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laurentian Bank and Berkshire Hathaway.
Diversification Opportunities for Laurentian Bank and Berkshire Hathaway
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Laurentian and Berkshire is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Laurentian Bank 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 Laurentian Bank 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 Laurentian Bank 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 Laurentian Bank i.e., Laurentian Bank and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Laurentian Bank and Berkshire Hathaway
Assuming the 90 days horizon Laurentian Bank is expected to generate 1.31 times more return on investment than Berkshire Hathaway. However, Laurentian Bank is 1.31 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 0.09 per unit of risk. If you would invest 2,518 in Laurentian Bank on September 19, 2024 and sell it today you would earn a total of 422.00 from holding Laurentian Bank or generate 16.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laurentian Bank vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| Laurentian Bank |
| Berkshire Hathaway CDR |
Laurentian Bank and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laurentian Bank and Berkshire Hathaway
The main advantage of trading using opposite Laurentian Bank and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laurentian Bank 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.| Laurentian Bank vs. Sylogist | Laurentian Bank vs. Sangoma Technologies Corp | Laurentian Bank vs. Firan Technology Group | Laurentian Bank vs. iShares Canadian HYBrid |
| Berkshire Hathaway vs. Intact Financial | Berkshire Hathaway vs. IGM Financial | Berkshire Hathaway vs. Laurentian Bank |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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