Correlation Between Berkshire Hathaway and Dream Residential

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

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

Diversification Opportunities for Berkshire Hathaway and Dream Residential

-0.63

Correlation Coefficient

Berkshire Hathaway  Dream Residential

Excellent diversification

The 3 months correlation between Berkshire and Dream is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Dream Residential Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Residential Real 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 CDR are associated (or correlated) with Dream Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Residential Real has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Dream Residential go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Dream Residential

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Dream Residential. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 2.48 times less risky than Dream Residential. The stock trades about -0.2 of its potential returns per unit of risk. The Dream Residential Real is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  887.00  in Dream Residential Real on May 7, 2025 and sell it today you would earn a total of  42.00  from holding Dream Residential Real or generate 4.74% return on investment over 90 days.

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

Berkshire Hathaway CDR  vs.  Dream Residential Real

Berkshire Hathaway CDR

Risk-Adjusted Performance

Weakest

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 latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Dream Residential Real

Risk-Adjusted Performance

Soft

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

Pair Trading with Berkshire Hathaway and Dream Residential

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

The idea behind Berkshire Hathaway CDR and Dream Residential Real 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 Stocks Directory module to find actively traded stocks across global markets.