Correlation Between Berkshire Hathaway and Peyto ExplorationDevel

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Peyto ExplorationDevel 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 Peyto ExplorationDevel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway and Peyto ExplorationDevelopment Corp, you can compare the effects of market volatilities on Berkshire Hathaway and Peyto ExplorationDevel 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 Peyto ExplorationDevel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Peyto ExplorationDevel.

Diversification Opportunities for Berkshire Hathaway and Peyto ExplorationDevel

0.36

Correlation Coefficient

Berkshire Hathaway  Peyto ExplorationDevel

Weak diversification

The 3 months correlation between Berkshire and Peyto is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Peyto ExplorationDevelopment C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peyto ExplorationDevel 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 Peyto ExplorationDevel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peyto ExplorationDevel has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Peyto ExplorationDevel go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Peyto ExplorationDevel

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 0.66 times more return on investment than Peyto ExplorationDevel. However, Berkshire Hathaway is 1.51 times less risky than Peyto ExplorationDevel. It trades about 0.22 of its potential returns per unit of risk. Peyto ExplorationDevelopment Corp is currently generating about 0.08 per unit of risk. If you would invest  45,216  in Berkshire Hathaway on December 29, 2024 and sell it today you would earn a total of  7,415  from holding Berkshire Hathaway or generate 16.4% 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  vs.  Peyto ExplorationDevelopment C

Berkshire Hathaway

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Berkshire Hathaway sustained solid returns over the last few months and may actually be approaching a breakup point.

Peyto ExplorationDevel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Peyto ExplorationDevelopment Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peyto ExplorationDevel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Berkshire Hathaway and Peyto ExplorationDevel

The main advantage of trading using opposite Berkshire Hathaway and Peyto ExplorationDevel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Peyto ExplorationDevel 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 Peyto ExplorationDevel will offset losses from the drop in Peyto ExplorationDevel's long position.

The idea behind Berkshire Hathaway and Peyto ExplorationDevelopment Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.