Correlation Between Leons Furniture and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Leons Furniture 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 Leons Furniture and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leons Furniture Limited and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Leons Furniture 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 Leons Furniture with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leons Furniture and Berkshire Hathaway.
Diversification Opportunities for Leons Furniture and Berkshire Hathaway
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leons and Berkshire is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Leons Furniture Limited 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 Leons Furniture 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 Leons Furniture Limited 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 Leons Furniture i.e., Leons Furniture and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Leons Furniture and Berkshire Hathaway
Assuming the 90 days trading horizon Leons Furniture is expected to generate 5.79 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Leons Furniture Limited is 1.09 times less risky than Berkshire Hathaway. It trades about 0.04 of its potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,406 in Berkshire Hathaway CDR on September 1, 2024 and sell it today you would earn a total of 249.00 from holding Berkshire Hathaway CDR or generate 7.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leons Furniture Limited vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| Leons Furniture |
| Berkshire Hathaway CDR |
Leons Furniture and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leons Furniture and Berkshire Hathaway
The main advantage of trading using opposite Leons Furniture and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leons Furniture 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.| Leons Furniture vs. High Liner Foods | Leons Furniture vs. Richelieu Hardware | Leons Furniture vs. North West | Leons Furniture vs. Toromont Industries |
| Berkshire Hathaway vs. Amazon CDR | Berkshire Hathaway vs. Apple Inc CDR | Berkshire Hathaway vs. Alphabet Inc CDR | Berkshire Hathaway vs. Walmart Inc CDR |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |