Correlation Between BANK HANDLOWY and Berkshire Hathaway

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

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

Diversification Opportunities for BANK HANDLOWY and Berkshire Hathaway

0.88

Correlation Coefficient

BANK HANDLOWY  Berkshire Hathaway

Very poor diversification

The 3 months correlation between BANK and Berkshire is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BANK HANDLOWY and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY i.e., BANK HANDLOWY and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between BANK HANDLOWY and Berkshire Hathaway

Assuming the 90 days trading horizon BANK HANDLOWY is expected to generate 0.7 times more return on investment than Berkshire Hathaway. However, BANK HANDLOWY is 1.42 times less risky than Berkshire Hathaway. It trades about 0.52 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.16 per unit of risk. If you would invest  2,070  in BANK HANDLOWY on December 30, 2024 and sell it today you would earn a total of  760.00  from holding BANK HANDLOWY or generate 36.71% return on investment over 90 days.

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

BANK HANDLOWY  vs.  Berkshire Hathaway

BANK HANDLOWY

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BANK HANDLOWY are ranked lower than 40 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, BANK HANDLOWY unveiled solid returns over the last few months and may actually be approaching a breakup point.

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. Despite nearly uncertain basic indicators, Berkshire Hathaway reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK HANDLOWY and Berkshire Hathaway

The main advantage of trading using opposite BANK HANDLOWY and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK HANDLOWY 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 BANK HANDLOWY 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.