Correlation Between Wilmington Capital and Berkshire Hathaway

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

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

Diversification Opportunities for Wilmington Capital and Berkshire Hathaway

0.36

Correlation Coefficient

Wilmington Capital  Berkshire Hathaway

Weak diversification

The 3 months correlation between Wilmington and Berkshire is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management 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 Wilmington Capital 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 Wilmington Capital Management 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 Wilmington Capital i.e., Wilmington Capital and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Wilmington Capital and Berkshire Hathaway

Assuming the 90 days trading horizon Wilmington Capital is expected to generate 1.02 times less return on investment than Berkshire Hathaway. In addition to that, Wilmington Capital is 4.24 times more volatile than Berkshire Hathaway CDR. It trades about 0.02 of its total potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.08 per unit of volatility. If you would invest  2,462  in Berkshire Hathaway CDR on October 4, 2024 and sell it today you would earn a total of  957.00  from holding Berkshire Hathaway CDR or generate 38.87% return on investment over 90 days.

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

Wilmington Capital Management  vs.  Berkshire Hathaway CDR

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Berkshire Hathaway CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkshire Hathaway CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Wilmington Capital and Berkshire Hathaway

The main advantage of trading using opposite Wilmington Capital and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Capital 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 Wilmington Capital Management 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.