Correlation Between Federal Realty and Berkshire Hathaway

Can any of the company-specific risk be diversified away by investing in both Federal Realty 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 Federal Realty and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federal Realty Investment and Berkshire Hathaway, you can compare the effects of market volatilities on Federal Realty 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 Federal Realty with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Realty and Berkshire Hathaway.

Diversification Opportunities for Federal Realty and Berkshire Hathaway

-0.77

Correlation Coefficient

Federal Realty  Berkshire Hathaway

Pay attention - limited upside

The 3 months correlation between Federal and Berkshire is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Federal Realty Investment and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Federal Realty 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 Federal Realty Investment 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 Federal Realty i.e., Federal Realty and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Federal Realty and Berkshire Hathaway

Assuming the 90 days trading horizon Federal Realty Investment is expected to under-perform the Berkshire Hathaway. But the stock apears to be less risky and, when comparing its historical volatility, Federal Realty Investment is 1.16 times less risky than Berkshire Hathaway. The stock trades about -0.15 of its potential returns per unit of risk. The Berkshire Hathaway is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  45,250  in Berkshire Hathaway on December 30, 2024 and sell it today you would earn a total of  7,400  from holding Berkshire Hathaway or generate 16.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Federal Realty Investment  vs.  Berkshire Hathaway

Federal Realty Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Federal Realty Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Berkshire Hathaway

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Berkshire Hathaway unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Federal Realty and Berkshire Hathaway

The main advantage of trading using opposite Federal Realty and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Realty 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.

The idea behind Federal Realty Investment and Berkshire Hathaway pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.