Correlation Between Berkshire Hathaway and Oracle
Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Oracle 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 Oracle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berkshire Hathaway and Oracle, you can compare the effects of market volatilities on Berkshire Hathaway and Oracle 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 Oracle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Oracle.
Diversification Opportunities for Berkshire Hathaway and Oracle
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Berkshire and Oracle is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle 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 Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Oracle go up and down completely randomly.
Pair Corralation between Berkshire Hathaway and Oracle
Assuming the 90 days trading horizon Berkshire Hathaway is expected to generate 1.88 times less return on investment than Oracle. But when comparing it to its historical volatility, Berkshire Hathaway is 1.57 times less risky than Oracle. It trades about 0.06 of its potential returns per unit of risk. Oracle is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,695 in Oracle on February 26, 2024 and sell it today you would earn a total of 4,885 from holding Oracle or generate 85.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Berkshire Hathaway vs. Oracle
Performance |
Timeline |
Berkshire Hathaway |
Oracle |
Berkshire Hathaway and Oracle Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Berkshire Hathaway and Oracle
The main advantage of trading using opposite Berkshire Hathaway and Oracle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berkshire Hathaway position performs unexpectedly, Oracle 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 Oracle will offset losses from the drop in Oracle's long position.Berkshire Hathaway vs. Porto Seguro SA | Berkshire Hathaway vs. Energisa SA | Berkshire Hathaway vs. BTG Pactual Logstica | Berkshire Hathaway vs. Plano Plano Desenvolvimento |
Oracle vs. Energisa SA | Oracle vs. BTG Pactual Logstica | Oracle vs. Plano Plano Desenvolvimento | Oracle vs. Companhia Habitasul de |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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