Correlation Between Medibank Private and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Medibank Private 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 Medibank Private and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private Limited and Berkshire Hathaway, you can compare the effects of market volatilities on Medibank Private 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 Medibank Private with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Berkshire Hathaway.
Diversification Opportunities for Medibank Private and Berkshire Hathaway
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medibank and Berkshire is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private Limited and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Medibank Private 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 Medibank Private 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 has no effect on the direction of Medibank Private i.e., Medibank Private and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Medibank Private and Berkshire Hathaway
Assuming the 90 days horizon Medibank Private is expected to generate 68.27 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, Medibank Private Limited is 27.78 times less risky than Berkshire Hathaway. It trades about 0.03 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 54,750,000 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 13,400,000 from holding Berkshire Hathaway or generate 24.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Medibank Private Limited vs. Berkshire Hathaway
Performance |
| Timeline |
| Medibank Private |
| Berkshire Hathaway |
Medibank Private and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and Berkshire Hathaway
The main advantage of trading using opposite Medibank Private and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private 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.| Medibank Private vs. DOCDATA | Medibank Private vs. MICRONIC MYDATA | Medibank Private vs. American Eagle Outfitters | Medibank Private vs. Public Storage |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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