Correlation Between NextSource Materials and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both NextSource Materials and Berkshire Hathaway 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 NextSource Materials and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextSource Materials and Berkshire Hathaway CDR, you can compare the effects of market volatilities on NextSource Materials and Berkshire Hathaway 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 NextSource Materials with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Berkshire Hathaway.
Diversification Opportunities for NextSource Materials and Berkshire Hathaway
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NextSource and Berkshire is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Berkshire Hathaway CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway CDR and NextSource Materials 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 NextSource Materials are associated (or correlated) with Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway CDR has no effect on the direction of NextSource Materials i.e., NextSource Materials and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between NextSource Materials and Berkshire Hathaway
Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Berkshire Hathaway. In addition to that, NextSource Materials is 3.61 times more volatile than Berkshire Hathaway CDR. It trades about -0.01 of its total potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.17 per unit of volatility. If you would invest 3,835 in Berkshire Hathaway CDR on January 1, 2025 and sell it today you would earn a total of 154.00 from holding Berkshire Hathaway CDR or generate 4.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NextSource Materials vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| NextSource Materials |
| Berkshire Hathaway CDR |
NextSource Materials and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextSource Materials and Berkshire Hathaway
The main advantage of trading using opposite NextSource Materials and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextSource Materials position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| NextSource Materials vs. Leading Edge Materials | NextSource Materials vs. Northern Graphite | NextSource Materials vs. Lomiko Metals | NextSource Materials vs. Elcora Advanced Materials |
| Berkshire Hathaway vs. Quipt Home Medical | Berkshire Hathaway vs. High Liner Foods | Berkshire Hathaway vs. Maple Leaf Foods | Berkshire Hathaway vs. SalesforceCom 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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