Correlation Between Berkshire Hathaway and Glencore PLC
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Glencore PLC 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 Glencore PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Glencore PLC ADR, you can compare the effects of market volatilities on Berkshire Hathaway and Glencore PLC 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 Glencore PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Glencore PLC.
Diversification Opportunities for Berkshire Hathaway and Glencore PLC
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Berkshire and Glencore is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Glencore PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glencore PLC ADR 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 Glencore PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glencore PLC ADR has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Glencore PLC go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Glencore PLC
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.6 times more return on investment than Glencore PLC. However, Berkshire Hathaway is 1.67 times less risky than Glencore PLC. It trades about 0.2 of its potential returns per unit of risk. Glencore PLC ADR is currently generating about -0.14 per unit of risk. If you would invest 45,462 in Berkshire Hathaway on August 30, 2024 and sell it today you would earn a total of 2,846 from holding Berkshire Hathaway or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway vs. Glencore PLC ADR
Performance |
| Timeline |
| Berkshire Hathaway |
| Glencore PLC ADR |
Berkshire Hathaway and Glencore PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Glencore PLC
The main advantage of trading using opposite Berkshire Hathaway and Glencore PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Glencore PLC 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 Glencore PLC will offset losses from the drop in Glencore PLC's long position.| Berkshire Hathaway vs. American International Group | Berkshire Hathaway vs. Sun Life Financial | Berkshire Hathaway vs. Arch Capital Group | Berkshire Hathaway vs. Hartford Financial Services |
| Glencore PLC vs. Rockridge Resources | Glencore PLC vs. Ameriwest Lithium | Glencore PLC vs. Osisko Metals Incorporated | Glencore PLC vs. Volt Lithium Corp |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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