Correlation Between Berkshire Hathaway and Generation Mining

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

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

Diversification Opportunities for Berkshire Hathaway and Generation Mining

-0.2

Correlation Coefficient

Berkshire Hathaway  Generation Mining

Good diversification

The 3 months correlation between Berkshire and Generation is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and Generation Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Mining 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 CDR are associated (or correlated) with Generation Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Mining has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Generation Mining go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Generation Mining

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Generation Mining. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 6.32 times less risky than Generation Mining. The stock trades about -0.16 of its potential returns per unit of risk. The Generation Mining is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Generation Mining on August 5, 2024 and sell it today you would earn a total of  8.00  from holding Generation Mining or generate 36.36% return on investment over 90 days.

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

Berkshire Hathaway CDR  vs.  Generation Mining

Berkshire Hathaway CDR

Risk-Adjusted Performance

9 of 100

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 December 2024.

Generation Mining

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Generation Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Generation Mining

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

The idea behind Berkshire Hathaway CDR and Generation Mining 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.