Correlation Between Berkshire Hathaway and XXL Energy
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and XXL Energy 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 XXL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and XXL Energy Corp, you can compare the effects of market volatilities on Berkshire Hathaway and XXL Energy 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 XXL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and XXL Energy.
Diversification Opportunities for Berkshire Hathaway and XXL Energy
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berkshire and XXL is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and XXL Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL Energy Corp 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 XXL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL Energy Corp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and XXL Energy go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and XXL Energy
Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.16 times more return on investment than XXL Energy. However, Berkshire Hathaway is 6.3 times less risky than XXL Energy. It trades about 0.1 of its potential returns per unit of risk. XXL Energy Corp is currently generating about -0.06 per unit of risk. If you would invest 35,209 in Berkshire Hathaway on September 12, 2024 and sell it today you would earn a total of 11,040 from holding Berkshire Hathaway or generate 31.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.7% |
| Values | Daily Returns |
Berkshire Hathaway vs. XXL Energy Corp
Performance |
| Timeline |
| Berkshire Hathaway |
| XXL Energy Corp |
Berkshire Hathaway and XXL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and XXL Energy
The main advantage of trading using opposite Berkshire Hathaway and XXL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, XXL Energy 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 XXL Energy will offset losses from the drop in XXL Energy'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 |
| XXL Energy vs. POSCO Holdings | XXL Energy vs. Schweizerische Nationalbank | XXL Energy vs. Berkshire Hathaway | XXL Energy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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