Correlation Between Berkshire Hathaway and NGEx Minerals

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

Diversification Opportunities for Berkshire Hathaway and NGEx Minerals

-0.85

Correlation Coefficient

Berkshire Hathaway  NGEx Minerals

Pay attention - limited upside

The 3 months correlation between Berkshire and NGEx is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals 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 NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and NGEx Minerals go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and NGEx Minerals

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the NGEx Minerals. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 3.21 times less risky than NGEx Minerals. The stock trades about -0.16 of its potential returns per unit of risk. The NGEx Minerals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,269  in NGEx Minerals on April 25, 2025 and sell it today you would earn a total of  662.00  from holding NGEx Minerals or generate 52.17% return on investment over 90 days.

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

Berkshire Hathaway CDR  vs.  NGEx Minerals

Berkshire Hathaway CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Berkshire Hathaway CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

NGEx Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, NGEx Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and NGEx Minerals

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

The idea behind Berkshire Hathaway CDR and NGEx Minerals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.