Correlation Between Mitchells Butlers and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Mitchells Butlers 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 Mitchells Butlers and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitchells Butlers PLC and Berkshire Hathaway, you can compare the effects of market volatilities on Mitchells Butlers 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 Mitchells Butlers with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitchells Butlers and Berkshire Hathaway.
Diversification Opportunities for Mitchells Butlers and Berkshire Hathaway
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitchells and Berkshire is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mitchells Butlers PLC and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Mitchells Butlers 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 Mitchells Butlers PLC 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 Mitchells Butlers i.e., Mitchells Butlers and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Mitchells Butlers and Berkshire Hathaway
Assuming the 90 days trading horizon Mitchells Butlers is expected to generate 12.86 times less return on investment than Berkshire Hathaway. In addition to that, Mitchells Butlers is 1.5 times more volatile than Berkshire Hathaway. It trades about 0.0 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.08 per unit of volatility. If you would invest 36,500 in Berkshire Hathaway on September 15, 2024 and sell it today you would earn a total of 9,475 from holding Berkshire Hathaway or generate 25.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Mitchells Butlers PLC vs. Berkshire Hathaway
Performance |
| Timeline |
| Mitchells Butlers PLC |
| Berkshire Hathaway |
Mitchells Butlers and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitchells Butlers and Berkshire Hathaway
The main advantage of trading using opposite Mitchells Butlers and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitchells Butlers 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.| Mitchells Butlers vs. Berkshire Hathaway | Mitchells Butlers vs. Hyundai Motor | Mitchells Butlers vs. Samsung Electronics Co | Mitchells Butlers vs. Samsung Electronics Co |
| Berkshire Hathaway vs. Samsung Electronics Co | Berkshire Hathaway vs. Samsung Electronics Co | Berkshire Hathaway vs. Hyundai Motor | Berkshire Hathaway vs. Reliance Industries Ltd |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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