Correlation Between Berkshire Hathaway and Holloman Energy

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

Diversification Opportunities for Berkshire Hathaway and Holloman Energy

0.0

Correlation Coefficient

Berkshire Hathaway  Holloman Energy

Pay attention - limited upside

The 3 months correlation between Berkshire and Holloman is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Holloman Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holloman Energy Corp 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 Holloman Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holloman Energy Corp has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Holloman Energy go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Holloman Energy

Assuming the 90 days horizon Berkshire Hathaway is expected to generate 6.95 times less return on investment than Holloman Energy. But when comparing it to its historical volatility, Berkshire Hathaway is 20.55 times less risky than Holloman Energy. It trades about 0.1 of its potential returns per unit of risk. Holloman Energy Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.58  in Holloman Energy Corp on September 14, 2024 and sell it today you would lose (0.57) from holding Holloman Energy Corp or give up 98.28% of portfolio value over 90 days.

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

Berkshire Hathaway  vs.  Holloman Energy Corp

Berkshire Hathaway

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 2 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

Holloman Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holloman Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Berkshire Hathaway and Holloman Energy

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

The idea behind Berkshire Hathaway and Holloman Energy Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.