Correlation Between Berkshire Hathaway and Corporativo Fragua

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

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

Diversification Opportunities for Berkshire Hathaway and Corporativo Fragua

-0.65

Correlation Coefficient

Berkshire Hathaway  Corporativo Fragua

Excellent diversification

The 3 months correlation between Berkshire and Corporativo is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Corporativo Fragua SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporativo Fragua SAB 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 Corporativo Fragua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporativo Fragua SAB has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Corporativo Fragua go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Corporativo Fragua

Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.5 times more return on investment than Corporativo Fragua. However, Berkshire Hathaway is 2.0 times less risky than Corporativo Fragua. It trades about 0.17 of its potential returns per unit of risk. Corporativo Fragua SAB is currently generating about -0.13 per unit of risk. If you would invest  939,405  in Berkshire Hathaway on December 28, 2024 and sell it today you would earn a total of  146,597  from holding Berkshire Hathaway or generate 15.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Berkshire Hathaway  vs.  Corporativo Fragua SAB

Berkshire Hathaway

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Berkshire Hathaway showed solid returns over the last few months and may actually be approaching a breakup point.

Corporativo Fragua SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporativo Fragua SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Berkshire Hathaway and Corporativo Fragua

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

The idea behind Berkshire Hathaway and Corporativo Fragua SAB 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.