Correlation Between Berkshire Hathaway and WALMART

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

By analyzing existing cross correlation between Berkshire Hathaway and WALMART INC 5, you can compare the effects of market volatilities on Berkshire Hathaway and WALMART 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 WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and WALMART.

Diversification Opportunities for Berkshire Hathaway and WALMART

0.09

Correlation Coefficient

Berkshire Hathaway  WALMART

Significant diversification

The 3 months correlation between Berkshire and WALMART is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and WALMART INC 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC 5 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 WALMART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WALMART INC 5 has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and WALMART go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and WALMART

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 1.43 times more return on investment than WALMART. However, Berkshire Hathaway is 1.43 times more volatile than WALMART INC 5. It trades about 0.15 of its potential returns per unit of risk. WALMART INC 5 is currently generating about 0.09 per unit of risk. If you would invest  69,655,200  in Berkshire Hathaway on February 2, 2025 and sell it today you would earn a total of  11,279,800  from holding Berkshire Hathaway or generate 16.19% return on investment over 90 days.

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

Berkshire Hathaway  vs.  WALMART INC 5

Berkshire Hathaway

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Berkshire Hathaway sustained solid returns over the last few months and may actually be approaching a breakup point.

WALMART INC 5

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WALMART INC 5 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Berkshire Hathaway and WALMART

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

The idea behind Berkshire Hathaway and WALMART INC 5 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.