Correlation Between Berkshire Hathaway and Liontrust Asset

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

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

Diversification Opportunities for Berkshire Hathaway and Liontrust Asset

-0.32

Correlation Coefficient

Berkshire Hathaway  Liontrust Asset

Very good diversification

The 3 months correlation between Berkshire and Liontrust is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Liontrust Asset go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Liontrust Asset

Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the Liontrust Asset. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 2.82 times less risky than Liontrust Asset. The stock trades about -0.29 of its potential returns per unit of risk. The Liontrust Asset Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  45,750  in Liontrust Asset Management on October 6, 2024 and sell it today you would earn a total of  1,250  from holding Liontrust Asset Management or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Berkshire Hathaway  vs.  Liontrust Asset Management

Berkshire Hathaway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkshire Hathaway has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Liontrust Asset Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Liontrust Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Berkshire Hathaway and Liontrust Asset

The main advantage of trading using opposite Berkshire Hathaway and Liontrust Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Liontrust Asset 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 Liontrust Asset will offset losses from the drop in Liontrust Asset's long position.

The idea behind Berkshire Hathaway and Liontrust Asset Management 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.