Correlation Between Berkshire Hathaway and CITIGROUP CDR

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

Diversification Opportunities for Berkshire Hathaway and CITIGROUP CDR

-0.85

Correlation Coefficient

Berkshire Hathaway  CITIGROUP CDR

Pay attention - limited upside

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

Pair Corralation between Berkshire Hathaway and CITIGROUP CDR

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the CITIGROUP CDR. But the stock apears to be less risky and, when comparing its historical volatility, Berkshire Hathaway CDR is 1.95 times less risky than CITIGROUP CDR. The stock trades about -0.2 of its potential returns per unit of risk. The CITIGROUP CDR is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  2,959  in CITIGROUP CDR on May 7, 2025 and sell it today you would earn a total of  884.00  from holding CITIGROUP CDR or generate 29.87% 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.  CITIGROUP CDR

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 unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CITIGROUP CDR

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CITIGROUP CDR are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, CITIGROUP CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and CITIGROUP CDR

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

The idea behind Berkshire Hathaway CDR and CITIGROUP CDR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.