Correlation Between Berkshire Hathaway and Keg Royalties

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

Diversification Opportunities for Berkshire Hathaway and Keg Royalties

-0.89

Correlation Coefficient

Berkshire Hathaway  Keg Royalties

Pay attention - limited upside

The 3 months correlation between Berkshire and Keg is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway CDR and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Keg Royalties go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Keg Royalties

Assuming the 90 days trading horizon Berkshire Hathaway CDR is expected to under-perform the Keg Royalties. In addition to that, Berkshire Hathaway is 2.38 times more volatile than The Keg Royalties. It trades about -0.23 of its total potential returns per unit of risk. The Keg Royalties is currently generating about 0.22 per unit of volatility. If you would invest  1,783  in The Keg Royalties on May 7, 2025 and sell it today you would earn a total of  81.00  from holding The Keg Royalties or generate 4.54% 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.  The Keg Royalties

Berkshire Hathaway CDR

Risk-Adjusted Performance

Weakest

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 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.

Keg Royalties

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Keg Royalties are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Keg Royalties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Berkshire Hathaway and Keg Royalties

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

The idea behind Berkshire Hathaway CDR and The Keg Royalties 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.