Correlation Between Berkshire Hathaway and Shopify

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Shopify 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 Shopify 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 Shopify, you can compare the effects of market volatilities on Berkshire Hathaway and Shopify 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 Shopify. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Shopify.

Diversification Opportunities for Berkshire Hathaway and Shopify

-0.77

Correlation Coefficient

Berkshire Hathaway  Shopify

Pay attention - limited upside

The 3 months correlation between Berkshire and Shopify is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Shopify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopify 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 Shopify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopify has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Shopify go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Shopify

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Shopify. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 3.98 times less risky than Shopify. The stock trades about -0.2 of its potential returns per unit of risk. The Shopify is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  13,129  in Shopify on May 7, 2025 and sell it today you would earn a total of  3,234  from holding Shopify or generate 24.63% 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.  Shopify

Berkshire Hathaway CDR

Risk-Adjusted Performance

Very Weak

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 unfluctuating performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Shopify

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shopify are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Shopify displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Shopify

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

The idea behind Berkshire Hathaway CDR and Shopify 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.