Correlation Between Berkshire Hathaway and Grupo Nacional

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

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

Diversification Opportunities for Berkshire Hathaway and Grupo Nacional

-0.14

Correlation Coefficient

Berkshire Hathaway  Grupo Nacional

Good diversification

The 3 months correlation between Berkshire and Grupo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Grupo Nacional Provincial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Nacional Provincial 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 Grupo Nacional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Nacional Provincial has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Grupo Nacional go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Grupo Nacional

Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the Grupo Nacional. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.0 times less risky than Grupo Nacional. The stock trades about -0.11 of its potential returns per unit of risk. The Grupo Nacional Provincial is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  11,200  in Grupo Nacional Provincial on October 10, 2024 and sell it today you would earn a total of  377.00  from holding Grupo Nacional Provincial or generate 3.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Berkshire Hathaway  vs.  Grupo Nacional Provincial

Berkshire Hathaway

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Grupo Nacional Provincial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Nacional Provincial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Berkshire Hathaway and Grupo Nacional

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

The idea behind Berkshire Hathaway and Grupo Nacional Provincial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.