Correlation Between Tesla and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Tesla 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 Tesla and Berkshire Hathaway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc CDR and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Tesla 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 Tesla with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Berkshire Hathaway.
Diversification Opportunities for Tesla and Berkshire Hathaway
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tesla and Berkshire is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR 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 Tesla 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 Tesla Inc CDR 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 Tesla i.e., Tesla and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Tesla and Berkshire Hathaway
Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 3.45 times more return on investment than Berkshire Hathaway. However, Tesla is 3.45 times more volatile than Berkshire Hathaway CDR. It trades about 0.26 of its potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.14 per unit of risk. If you would invest 2,394 in Tesla Inc CDR on August 28, 2024 and sell it today you would earn a total of 693.00 from holding Tesla Inc CDR or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc CDR vs. Berkshire Hathaway CDR
Performance |
| Timeline |
| Tesla Inc CDR |
| Berkshire Hathaway CDR |
Tesla and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Berkshire Hathaway
The main advantage of trading using opposite Tesla and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla 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.| Tesla vs. Canlan Ice Sports | Tesla vs. Comprehensive Healthcare Systems | Tesla vs. Chemtrade Logistics Income | Tesla vs. DRI Healthcare Trust |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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