Correlation Between International General and Berkshire Hathaway

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

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

Diversification Opportunities for International General and Berkshire Hathaway

0.48

Correlation Coefficient

International General  Berkshire Hathaway

Very weak diversification

The 3 months correlation between International and Berkshire is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding International General Insuranc and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and International General 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 International General Insurance 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 International General i.e., International General and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between International General and Berkshire Hathaway

Given the investment horizon of 90 days International General Insurance is expected to generate 2.19 times more return on investment than Berkshire Hathaway. However, International General is 2.19 times more volatile than Berkshire Hathaway. It trades about 0.25 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.02 per unit of risk. If you would invest  1,848  in International General Insurance on August 30, 2024 and sell it today you would earn a total of  812.00  from holding International General Insurance or generate 43.94% return on investment over 90 days.

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

International General Insuranc  vs.  Berkshire Hathaway

International General

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International General Insurance are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, International General exhibited 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 International General and Berkshire Hathaway

The main advantage of trading using opposite International General and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International General 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 International General Insurance 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.