Correlation Between Berkshire Hathaway and United States

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

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

Diversification Opportunities for Berkshire Hathaway and United States

0.0

Correlation Coefficient

Berkshire Hathaway  United States

Pay attention - limited upside

The 3 months correlation between Berkshire and United is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and United States Cellular in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Cellular 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Cellular has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and United States go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and United States

If you would invest  65,550,000  in Berkshire Hathaway on December 23, 2024 and sell it today you would earn a total of  7,050,000  from holding Berkshire Hathaway or generate 10.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Berkshire Hathaway  vs.  United States Cellular

Berkshire Hathaway

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

United States Cellular

Risk-Adjusted Performance

Insignificant

Over the last 90 days United States Cellular has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, United States is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Berkshire Hathaway and United States

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

The idea behind Berkshire Hathaway and United States Cellular 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .