Correlation Between Roebuck Food and Berkshire Hathaway

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

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

Diversification Opportunities for Roebuck Food and Berkshire Hathaway

0.4

Correlation Coefficient

Roebuck Food  Berkshire Hathaway

Very weak diversification

The 3 months correlation between Roebuck and Berkshire is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Roebuck Food 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 Roebuck Food Group 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 Roebuck Food i.e., Roebuck Food and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Roebuck Food and Berkshire Hathaway

Assuming the 90 days trading horizon Roebuck Food Group is expected to generate 0.8 times more return on investment than Berkshire Hathaway. However, Roebuck Food Group is 1.25 times less risky than Berkshire Hathaway. It trades about 0.14 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.04 per unit of risk. If you would invest  1,580  in Roebuck Food Group on September 14, 2024 and sell it today you would earn a total of  100.00  from holding Roebuck Food Group or generate 6.33% return on investment over 90 days.

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

Roebuck Food Group  vs.  Berkshire Hathaway

Roebuck Food Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roebuck Food Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Roebuck Food is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Berkshire Hathaway

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Roebuck Food and Berkshire Hathaway

The main advantage of trading using opposite Roebuck Food and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food 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 Roebuck Food Group 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.