Correlation Between Berkshire Hathaway and Swiss Life

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

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

Diversification Opportunities for Berkshire Hathaway and Swiss Life

0.47

Correlation Coefficient

Berkshire Hathaway  Swiss Life

Very weak diversification

The 3 months correlation between Berkshire and Swiss is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Swiss Life Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swiss Life Holding 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 Swiss Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swiss Life Holding has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Swiss Life go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Swiss Life

Assuming the 90 days trading horizon Berkshire Hathaway is expected to under-perform the Swiss Life. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 3.29 times less risky than Swiss Life. The stock trades about -0.35 of its potential returns per unit of risk. The Swiss Life Holding is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  3,900  in Swiss Life Holding on September 24, 2024 and sell it today you would lose (200.00) from holding Swiss Life Holding or give up 5.13% of portfolio value over 90 days.

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

Berkshire Hathaway  vs.  Swiss Life Holding

Berkshire Hathaway

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Swiss Life Holding

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swiss Life Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Swiss Life is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Berkshire Hathaway and Swiss Life

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

The idea behind Berkshire Hathaway and Swiss Life Holding 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.