Correlation Between Berkshire Hathaway and Kelt Exploration
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Kelt Exploration 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 Kelt Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Kelt Exploration, you can compare the effects of market volatilities on Berkshire Hathaway and Kelt Exploration 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 Kelt Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Kelt Exploration.
Diversification Opportunities for Berkshire Hathaway and Kelt Exploration
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Kelt is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Kelt Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelt Exploration 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 Kelt Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelt Exploration has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Kelt Exploration go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Kelt Exploration
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.35 times more return on investment than Kelt Exploration. However, Berkshire Hathaway is 2.87 times less risky than Kelt Exploration. It trades about 0.1 of its potential returns per unit of risk. Kelt Exploration is currently generating about 0.03 per unit of risk. If you would invest 30,649 in Berkshire Hathaway on September 13, 2024 and sell it today you would earn a total of 15,214 from holding Berkshire Hathaway or generate 49.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Berkshire Hathaway vs. Kelt Exploration
Performance |
| Timeline |
| Berkshire Hathaway |
| Kelt Exploration |
Berkshire Hathaway and Kelt Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Kelt Exploration
The main advantage of trading using opposite Berkshire Hathaway and Kelt Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Kelt Exploration 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 Kelt Exploration will offset losses from the drop in Kelt Exploration'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 |
| Kelt Exploration vs. ROK Resources | Kelt Exploration vs. PetroShale | Kelt Exploration vs. Pieridae Energy Limited | Kelt Exploration vs. Bengal Energy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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