Correlation Between Berkshire Hathaway and Empreendimentos Pague

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

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

Diversification Opportunities for Berkshire Hathaway and Empreendimentos Pague

0.64

Correlation Coefficient

Berkshire Hathaway  Empreendimentos Pague

Poor diversification

The 3 months correlation between Berkshire and Empreendimentos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Empreendimentos Pague Menos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empreendimentos Pague 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 Empreendimentos Pague. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empreendimentos Pague has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Empreendimentos Pague go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Empreendimentos Pague

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.29 times more return on investment than Empreendimentos Pague. However, Berkshire Hathaway is 3.46 times less risky than Empreendimentos Pague. It trades about 0.18 of its potential returns per unit of risk. Empreendimentos Pague Menos is currently generating about -0.05 per unit of risk. If you would invest  13,158  in Berkshire Hathaway on October 8, 2024 and sell it today you would earn a total of  926.00  from holding Berkshire Hathaway or generate 7.04% return on investment over 90 days.

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

Berkshire Hathaway  vs.  Empreendimentos Pague Menos

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.

Empreendimentos Pague

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Empreendimentos Pague Menos are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Empreendimentos Pague unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Empreendimentos Pague

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

The idea behind Berkshire Hathaway and Empreendimentos Pague Menos 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.