No. of Recommendations: 4
According to the WSJ, that's because a strong negative correlation has developed between chip stocks and healthcare stocks. And algorithmic trading has used that as a hedge, particularly as concerns have increased about the future of chip stocks. JNJ is a short in disguise
.........Which makes me wonder why BRK.B isn't seeing the same trades?
.........In other words, apparently it doesn't have the strong negative correlation needed to attract the algorithmic trading world. I only imply that, I haven't seen the data.
I did. 1/2 year ago I told an Indian daytrader friend that since I year I observe BRK going down on days the S&P/Nasdaq is up and vice versa. He sent me the daily data for S&P/BRK for the last years, hoping we could come up with an algorithm to use that. We analysed the data and found a negative daily correlation between S&P and BRK, but not strong enough for daytrading. In hindsight I regret not having asked him for Nasdaq data instead of S&P as that actually was my subjective observation, a strong daily negative correlation between Nasdaq and BRK (Thank you, Texirish. I will ask him now for that data).
