Correlation Between Berkshire Hathaway and Exxon
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway CDR and EXXON MOBIL CDR, you can compare the effects of market volatilities on Berkshire Hathaway and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Exxon.
Diversification Opportunities for Berkshire Hathaway and Exxon
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Berkshire and Exxon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and EXXON MOBIL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXXON MOBIL CDR 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 CDR are associated (or correlated) with Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXXON MOBIL CDR has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Exxon go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Exxon
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.42 times less return on investment than Exxon. But when comparing it to its historical volatility, Berkshire Hathaway CDR is 1.24 times less risky than Exxon. It trades about 0.04 of its potential returns per unit of risk. EXXON MOBIL CDR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,172 in EXXON MOBIL CDR on August 28, 2024 and sell it today you would earn a total of 73.00 from holding EXXON MOBIL CDR or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berkshire Hathaway CDR vs. EXXON MOBIL CDR
Performance |
| Timeline |
| Berkshire Hathaway CDR |
| EXXON MOBIL CDR |
Berkshire Hathaway and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berkshire Hathaway and Exxon
The main advantage of trading using opposite Berkshire Hathaway and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| Berkshire Hathaway vs. NVIDIA CDR | Berkshire Hathaway vs. Apple Inc CDR | Berkshire Hathaway vs. Microsoft Corp CDR | Berkshire Hathaway vs. Amazon CDR |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |