Correlation Between Berkshire Hathaway and Assicurazioni Generali

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

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

Diversification Opportunities for Berkshire Hathaway and Assicurazioni Generali

0.65

Correlation Coefficient

Berkshire Hathaway  Assicurazioni Generali

Poor diversification

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

Pair Corralation between Berkshire Hathaway and Assicurazioni Generali

Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the Assicurazioni Generali. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 1.79 times less risky than Assicurazioni Generali. The stock trades about -0.34 of its potential returns per unit of risk. The Assicurazioni Generali SpA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,702  in Assicurazioni Generali SpA on September 23, 2024 and sell it today you would earn a total of  5.00  from holding Assicurazioni Generali SpA or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Berkshire Hathaway  vs.  Assicurazioni Generali SpA

Berkshire Hathaway

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Assicurazioni Generali

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Assicurazioni Generali is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Berkshire Hathaway and Assicurazioni Generali

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

The idea behind Berkshire Hathaway and Assicurazioni Generali SpA 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.