Correlation Between Berkshire Hathaway and Molson Coors

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Molson Coors 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 Molson Coors 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 Molson Coors Canada, you can compare the effects of market volatilities on Berkshire Hathaway and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Molson Coors.

Diversification Opportunities for Berkshire Hathaway and Molson Coors

-0.22

Correlation Coefficient

Berkshire Hathaway  Molson Coors

Very good diversification

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

Pair Corralation between Berkshire Hathaway and Molson Coors

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to generate 0.53 times more return on investment than Molson Coors. However, Berkshire Hathaway CDR is 1.9 times less risky than Molson Coors. It trades about 0.11 of its potential returns per unit of risk. Molson Coors Canada is currently generating about 0.05 per unit of risk. If you would invest  3,608  in Berkshire Hathaway CDR on December 1, 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 Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Berkshire Hathaway CDR  vs.  Molson Coors Canada

Berkshire Hathaway CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Molson Coors Canada

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Molson Coors Canada are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Molson Coors may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Berkshire Hathaway and Molson Coors

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

The idea behind Berkshire Hathaway CDR and Molson Coors Canada 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.