Correlation Between SLR Investment and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both SLR Investment 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 SLR Investment and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and Berkshire Hathaway, you can compare the effects of market volatilities on SLR Investment 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 SLR Investment with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Berkshire Hathaway.
Diversification Opportunities for SLR Investment and Berkshire Hathaway
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SLR and Berkshire is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between SLR Investment and Berkshire Hathaway
Assuming the 90 days horizon SLR Investment is expected to generate 24.07 times less return on investment than Berkshire Hathaway. But when comparing it to its historical volatility, SLR Investment Corp is 42.3 times less risky than Berkshire Hathaway. It trades about 0.08 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 42,750,000 in Berkshire Hathaway on December 4, 2024 and sell it today you would earn a total of 30,850,000 from holding Berkshire Hathaway or generate 72.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. Berkshire Hathaway
Performance |
| Timeline |
| SLR Investment Corp |
| Berkshire Hathaway |
SLR Investment and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and Berkshire Hathaway
The main advantage of trading using opposite SLR Investment and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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.| SLR Investment vs. SENECA FOODS A | SLR Investment vs. PLANT VEDA FOODS | SLR Investment vs. China Modern Dairy | SLR Investment vs. JAPAN AIRLINES |
| Berkshire Hathaway vs. High Liner Foods | Berkshire Hathaway vs. EBRO FOODS | Berkshire Hathaway vs. United Natural Foods | Berkshire Hathaway vs. Molson Coors Beverage |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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