Correlation Between Falcon Energy and Berkshire Hathaway

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

By analyzing existing cross correlation between Falcon Energy Materials and Berkshire Hathaway CDR, you can compare the effects of market volatilities on Falcon Energy 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 Falcon Energy with a short position of Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Berkshire Hathaway.

Diversification Opportunities for Falcon Energy and Berkshire Hathaway

-0.02

Correlation Coefficient

Falcon Energy  Berkshire Hathaway

Good diversification

The 3 months correlation between Falcon and Berkshire is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy 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 Falcon Energy 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 Falcon Energy 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 Falcon Energy i.e., Falcon Energy and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Falcon Energy and Berkshire Hathaway

Assuming the 90 days trading horizon Falcon Energy Materials is expected to under-perform the Berkshire Hathaway. In addition to that, Falcon Energy is 4.47 times more volatile than Berkshire Hathaway CDR. It trades about -0.08 of its total potential returns per unit of risk. Berkshire Hathaway CDR is currently generating about 0.12 per unit of volatility. If you would invest  3,537  in Berkshire Hathaway CDR on December 4, 2024 and sell it today you would earn a total of  278.00  from holding Berkshire Hathaway CDR or generate 7.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Falcon Energy Materials  vs.  Berkshire Hathaway CDR

Falcon Energy Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Berkshire Hathaway CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Berkshire Hathaway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Falcon Energy and Berkshire Hathaway

The main advantage of trading using opposite Falcon Energy and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy 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.

The idea behind Falcon Energy Materials and Berkshire Hathaway CDR 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.