Correlation Between Microsoft and BERKSHIRE
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By analyzing existing cross correlation between Microsoft and BERKSHIRE HATHAWAY FIN, you can compare the effects of market volatilities on Microsoft and BERKSHIRE 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 Microsoft with a short position of BERKSHIRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and BERKSHIRE.
Diversification Opportunities for Microsoft and BERKSHIRE
Average diversification
The 3 months correlation between Microsoft and BERKSHIRE is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and BERKSHIRE HATHAWAY FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BERKSHIRE HATHAWAY FIN and Microsoft 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 Microsoft are associated (or correlated) with BERKSHIRE. 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 FIN has no effect on the direction of Microsoft i.e., Microsoft and BERKSHIRE go up and down completely randomly.
Pair Corralation between Microsoft and BERKSHIRE
Given the investment horizon of 90 days Microsoft is expected to generate 1.06 times more return on investment than BERKSHIRE. However, Microsoft is 1.06 times more volatile than BERKSHIRE HATHAWAY FIN. It trades about 0.15 of its potential returns per unit of risk. BERKSHIRE HATHAWAY FIN is currently generating about 0.02 per unit of risk. If you would invest 40,955 in Microsoft on September 2, 2024 and sell it today you would earn a total of 1,391 from holding Microsoft or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. BERKSHIRE HATHAWAY FIN
Performance |
| Timeline |
| Microsoft |
| BERKSHIRE HATHAWAY FIN |
Microsoft and BERKSHIRE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and BERKSHIRE
The main advantage of trading using opposite Microsoft and BERKSHIRE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, BERKSHIRE 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 will offset losses from the drop in BERKSHIRE's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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