Correlation Between Fidelis Insurance and Berkshire Hathaway

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

By analyzing existing cross correlation between Fidelis Insurance Holdings and Berkshire Hathaway, you can compare the effects of market volatilities on Fidelis Insurance and Berkshire Hathaway 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 Fidelis Insurance with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelis Insurance and Berkshire Hathaway.

Diversification Opportunities for Fidelis Insurance and Berkshire Hathaway

0.77

Correlation Coefficient

Fidelis Insurance  Berkshire Hathaway

Poor diversification

The 3 months correlation between Fidelis and Berkshire is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fidelis Insurance Holdings and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Fidelis Insurance 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 Fidelis Insurance Holdings are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Fidelis Insurance i.e., Fidelis Insurance and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Fidelis Insurance and Berkshire Hathaway

Given the investment horizon of 90 days Fidelis Insurance Holdings is expected to generate 1.97 times more return on investment than Berkshire Hathaway. However, Fidelis Insurance is 1.97 times more volatile than Berkshire Hathaway. It trades about 0.1 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.02 per unit of risk. If you would invest  1,811  in Fidelis Insurance Holdings on September 3, 2024 and sell it today you would earn a total of  229.00  from holding Fidelis Insurance Holdings or generate 12.64% return on investment over 90 days.

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

Fidelis Insurance Holdings  vs.  Berkshire Hathaway

Fidelis Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelis Insurance Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical indicators, Fidelis Insurance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Berkshire Hathaway

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Fidelis Insurance and Berkshire Hathaway

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

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