Correlation Between Berkshire Hathaway and KeyCorp

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

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

Diversification Opportunities for Berkshire Hathaway and KeyCorp

-0.22

Correlation Coefficient

Berkshire Hathaway  KeyCorp

Very good diversification

The 3 months correlation between Berkshire and KeyCorp is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and KeyCorp go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and KeyCorp

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 17.17 times more return on investment than KeyCorp. However, Berkshire Hathaway is 17.17 times more volatile than KeyCorp. It trades about 0.05 of its potential returns per unit of risk. KeyCorp is currently generating about 0.04 per unit of risk. If you would invest  41,200,000  in Berkshire Hathaway on December 7, 2024 and sell it today you would earn a total of  27,000,000  from holding Berkshire Hathaway or generate 65.53% 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.  KeyCorp

Berkshire Hathaway

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KeyCorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days KeyCorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Berkshire Hathaway and KeyCorp

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

The idea behind Berkshire Hathaway and KeyCorp 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.