Correlation Between Berkshire Hathaway and 5N Plus

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and 5N Plus 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 5N Plus 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 5N Plus, you can compare the effects of market volatilities on Berkshire Hathaway and 5N Plus 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 5N Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and 5N Plus.

Diversification Opportunities for Berkshire Hathaway and 5N Plus

0.0

Correlation Coefficient

Berkshire Hathaway  5N Plus

Pay attention - limited upside

The 3 months correlation between Berkshire and VNP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and 5N Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5N Plus 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 5N Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5N Plus has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and 5N Plus go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and 5N Plus

If you would invest  3,616  in Berkshire Hathaway CDR on September 3, 2024 and sell it today you would earn a total of  39.00  from holding Berkshire Hathaway CDR or generate 1.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Berkshire Hathaway CDR  vs.  5N Plus

Berkshire Hathaway CDR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway CDR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

5N Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5N Plus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, 5N Plus is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Berkshire Hathaway and 5N Plus

The main advantage of trading using opposite Berkshire Hathaway and 5N Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, 5N Plus 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 5N Plus will offset losses from the drop in 5N Plus' long position.

The idea behind Berkshire Hathaway CDR and 5N Plus 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.