Correlation Between SEALED AIR and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both SEALED AIR 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 SEALED AIR and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEALED AIR and Berkshire Hathaway, you can compare the effects of market volatilities on SEALED AIR 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 SEALED AIR with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEALED AIR and Berkshire Hathaway.
Diversification Opportunities for SEALED AIR and Berkshire Hathaway
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SEALED and Berkshire is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between SEALED AIR and Berkshire Hathaway
Assuming the 90 days trading horizon SEALED AIR is expected to under-perform the Berkshire Hathaway. In addition to that, SEALED AIR is 1.98 times more volatile than Berkshire Hathaway. It trades about -0.03 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.09 per unit of volatility. If you would invest 28,560 in Berkshire Hathaway on October 14, 2024 and sell it today you would earn a total of 14,705 from holding Berkshire Hathaway or generate 51.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SEALED AIR vs. Berkshire Hathaway
Performance |
| Timeline |
| SEALED AIR |
| Berkshire Hathaway |
SEALED AIR and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEALED AIR and Berkshire Hathaway
The main advantage of trading using opposite SEALED AIR and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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.| SEALED AIR vs. COMPUTERSHARE | SEALED AIR vs. Ribbon Communications | SEALED AIR vs. GMO Internet | SEALED AIR vs. Shenandoah Telecommunications |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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