Correlation Between Hyster Yale and Berkshire Hathaway

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

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

Diversification Opportunities for Hyster Yale and Berkshire Hathaway

-0.37

Correlation Coefficient

Hyster Yale  Berkshire Hathaway

Very good diversification

The 3 months correlation between Hyster and Berkshire is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Hyster Yale 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 Hyster Yale Materials Handling 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 Hyster Yale i.e., Hyster Yale and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Hyster Yale and Berkshire Hathaway

Assuming the 90 days trading horizon Hyster Yale Materials Handling is expected to generate 1.22 times more return on investment than Berkshire Hathaway. However, Hyster Yale is 1.22 times more volatile than Berkshire Hathaway. It trades about 0.21 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.01 per unit of risk. If you would invest  4,920  in Hyster Yale Materials Handling on October 25, 2024 and sell it today you would earn a total of  280.00  from holding Hyster Yale Materials Handling or generate 5.69% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  Berkshire Hathaway

Hyster Yale Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyster Yale Materials Handling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 rather sound basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hyster Yale and Berkshire Hathaway

The main advantage of trading using opposite Hyster Yale and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hyster Yale 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 Hyster Yale Materials Handling 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..