Correlation Between Rubicon Organics and Berkshire Hathaway

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

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

Diversification Opportunities for Rubicon Organics and Berkshire Hathaway

-0.64

Correlation Coefficient

Rubicon Organics  Berkshire Hathaway

Excellent diversification

The 3 months correlation between Rubicon and Berkshire is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Berkshire Hathaway CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway CDR and Rubicon Organics 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 Rubicon Organics 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 CDR has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Rubicon Organics and Berkshire Hathaway

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 1.71 times less return on investment than Berkshire Hathaway. In addition to that, Rubicon Organics is 6.95 times more volatile than Berkshire Hathaway CDR. It trades about 0.01 of its total potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.09 per unit of volatility. If you would invest  2,348  in Berkshire Hathaway CDR on September 15, 2024 and sell it today you would earn a total of  1,106  from holding Berkshire Hathaway CDR or generate 47.1% return on investment over 90 days.

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

Rubicon Organics  vs.  Berkshire Hathaway CDR

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Rubicon Organics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Berkshire Hathaway CDR

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Rubicon Organics and Berkshire Hathaway

The main advantage of trading using opposite Rubicon Organics and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rubicon Organics 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 Rubicon Organics and Berkshire Hathaway CDR 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 Stocks Directory module to find actively traded stocks across global markets.