Correlation Between Berkshire Hathaway and Franklin Resources,

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

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

Diversification Opportunities for Berkshire Hathaway and Franklin Resources,

0.78

Correlation Coefficient

Berkshire Hathaway  Franklin Resources,

Poor diversification

The 3 months correlation between Berkshire and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Franklin Resources, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources, 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 Franklin Resources,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources, has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Franklin Resources, go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Franklin Resources,

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.39 times more return on investment than Franklin Resources,. However, Berkshire Hathaway is 1.39 times more volatile than Franklin Resources,. It trades about 0.0 of its potential returns per unit of risk. Franklin Resources, is currently generating about -0.18 per unit of risk. If you would invest  14,100  in Berkshire Hathaway on October 8, 2024 and sell it today you would lose (16.00) from holding Berkshire Hathaway or give up 0.11% of portfolio value over 90 days.

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

Berkshire Hathaway  vs.  Franklin Resources,

Berkshire Hathaway

Risk-Adjusted Performance

12 of 100

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 somewhat weak basic indicators, Berkshire Hathaway sustained solid returns over the last few months and may actually be approaching a breakup point.

Franklin Resources,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Resources, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Franklin Resources, sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Franklin Resources,

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

The idea behind Berkshire Hathaway and Franklin Resources, 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.