Correlation Between Berkshire Hathaway and PetroShale
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and PetroShale 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 PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and PetroShale, you can compare the effects of market volatilities on Berkshire Hathaway and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and PetroShale.
Diversification Opportunities for Berkshire Hathaway and PetroShale
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Berkshire and PetroShale is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and PetroShale go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and PetroShale
Assuming the 90 days horizon Berkshire Hathaway is expected to under-perform the PetroShale. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway is 3.57 times less risky than PetroShale. The stock trades about -0.24 of its potential returns per unit of risk. The PetroShale is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 29.00 in PetroShale on September 17, 2024 and sell it today you would earn a total of 3.00 from holding PetroShale or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. PetroShale
Performance |
| Timeline |
| Berkshire Hathaway |
| PetroShale |
Berkshire Hathaway and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and PetroShale
The main advantage of trading using opposite Berkshire Hathaway and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Hartford Financial Services |
| PetroShale vs. POSCO Holdings | PetroShale vs. Schweizerische Nationalbank | PetroShale vs. Berkshire Hathaway | PetroShale vs. Berkshire Hathaway |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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