Correlation Between Whiting USA and Berkshire Hathaway

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

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

Diversification Opportunities for Whiting USA and Berkshire Hathaway

0.0

Correlation Coefficient

Whiting USA  Berkshire Hathaway

Pay attention - limited upside

The 3 months correlation between Whiting and Berkshire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Whiting USA Trust and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway and Whiting USA 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 Whiting USA Trust 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 has no effect on the direction of Whiting USA i.e., Whiting USA and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Whiting USA and Berkshire Hathaway

If you would invest  50,340,000  in Berkshire Hathaway on January 26, 2024 and sell it today you would earn a total of  11,002,000  from holding Berkshire Hathaway or generate 21.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Whiting USA Trust  vs.  Berkshire Hathaway

Whiting USA Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Whiting USA Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Whiting USA is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Berkshire Hathaway

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Whiting USA and Berkshire Hathaway

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

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.