Correlation Between Berkshire Hathaway and MOL Hungarian
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and MOL Hungarian 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 MOL Hungarian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and MOL Hungarian Oil, you can compare the effects of market volatilities on Berkshire Hathaway and MOL Hungarian 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 MOL Hungarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and MOL Hungarian.
Diversification Opportunities for Berkshire Hathaway and MOL Hungarian
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Berkshire and MOL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and MOL Hungarian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Hungarian Oil 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 MOL Hungarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Hungarian Oil has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and MOL Hungarian go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and MOL Hungarian
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 0.4 times more return on investment than MOL Hungarian. However, Berkshire Hathaway is 2.51 times less risky than MOL Hungarian. It trades about 0.23 of its potential returns per unit of risk. MOL Hungarian Oil is currently generating about 0.01 per unit of risk. If you would invest 45,500 in Berkshire Hathaway on September 1, 2024 and sell it today you would earn a total of 2,950 from holding Berkshire Hathaway or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Berkshire Hathaway vs. MOL Hungarian Oil
Performance |
| Timeline |
| Berkshire Hathaway |
| MOL Hungarian Oil |
Berkshire Hathaway and MOL Hungarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and MOL Hungarian
The main advantage of trading using opposite Berkshire Hathaway and MOL Hungarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, MOL Hungarian 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 MOL Hungarian will offset losses from the drop in MOL Hungarian's long position.| Berkshire Hathaway vs. McEwen Mining | Berkshire Hathaway vs. Allianz Technology Trust | Berkshire Hathaway vs. Cornish Metals | Berkshire Hathaway vs. Sunny Optical Technology |
| MOL Hungarian vs. Aeorema Communications Plc | MOL Hungarian vs. Verizon Communications | MOL Hungarian vs. Bloomsbury Publishing Plc | MOL Hungarian vs. Infrastrutture Wireless Italiane |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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