Correlation Between Berkshire Hathaway and CONSOL Energy

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and CONSOL 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 CONSOL 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 CONSOL Energy, you can compare the effects of market volatilities on Berkshire Hathaway and CONSOL 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 CONSOL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and CONSOL Energy.

Diversification Opportunities for Berkshire Hathaway and CONSOL Energy

-0.85

Correlation Coefficient

Berkshire Hathaway  CONSOL Energy

Pay attention - limited upside

The 3 months correlation between Berkshire and CONSOL is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy 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 CONSOL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOL Energy has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and CONSOL Energy go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and CONSOL Energy

If you would invest  43,575  in Berkshire Hathaway on December 29, 2024 and sell it today you would earn a total of  5,085  from holding Berkshire Hathaway or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Berkshire Hathaway  vs.  CONSOL Energy

Berkshire Hathaway

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CONSOL Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONSOL Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CONSOL Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Berkshire Hathaway and CONSOL Energy

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

The idea behind Berkshire Hathaway and CONSOL Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.