Correlation Between Berkshire Hathaway and MCAN Mortgage
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and MCAN Mortgage 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 MCAN Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway CDR and MCAN Mortgage, you can compare the effects of market volatilities on Berkshire Hathaway and MCAN Mortgage 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 MCAN Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and MCAN Mortgage.
Diversification Opportunities for Berkshire Hathaway and MCAN Mortgage
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and MCAN is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and MCAN Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCAN Mortgage 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 CDR are associated (or correlated) with MCAN Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCAN Mortgage has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and MCAN Mortgage go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and MCAN Mortgage
Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to generate 1.08 times more return on investment than MCAN Mortgage. However, Berkshire Hathaway is 1.08 times more volatile than MCAN Mortgage. It trades about 0.11 of its potential returns per unit of risk. MCAN Mortgage is currently generating about -0.03 per unit of risk. If you would invest 3,608 in Berkshire Hathaway CDR on December 2, 2024 and sell it today you would earn a total of 262.00 from holding Berkshire Hathaway CDR or generate 7.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Berkshire Hathaway CDR vs. MCAN Mortgage
Performance |
Timeline |
Berkshire Hathaway CDR |
MCAN Mortgage |
Berkshire Hathaway and MCAN Mortgage Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Berkshire Hathaway and MCAN Mortgage
The main advantage of trading using opposite Berkshire Hathaway and MCAN Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, MCAN Mortgage 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 MCAN Mortgage will offset losses from the drop in MCAN Mortgage's long position.Berkshire Hathaway vs. Canadian Utilities Limited | Berkshire Hathaway vs. Element Fleet Management | Berkshire Hathaway vs. Brookfield Asset Management | Berkshire Hathaway vs. Caribbean Utilities |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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