Correlation Between Ark Restaurants and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Ark Restaurants and Biglari Holdings 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 Ark Restaurants and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ark Restaurants Corp and Biglari Holdings, you can compare the effects of market volatilities on Ark Restaurants and Biglari Holdings 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 Ark Restaurants with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and Biglari Holdings.
Diversification Opportunities for Ark Restaurants and Biglari Holdings
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ark and Biglari is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Ark Restaurants 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 Ark Restaurants Corp are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Ark Restaurants i.e., Ark Restaurants and Biglari Holdings go up and down completely randomly.
Pair Corralation between Ark Restaurants and Biglari Holdings
Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Biglari Holdings. In addition to that, Ark Restaurants is 1.05 times more volatile than Biglari Holdings. It trades about -0.05 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.07 per unit of volatility. If you would invest 14,582 in Biglari Holdings on August 26, 2024 and sell it today you would earn a total of 6,059 from holding Biglari Holdings or generate 41.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.19% |
| Values | Daily Returns |
Ark Restaurants Corp vs. Biglari Holdings
Performance |
| Timeline |
| Ark Restaurants Corp |
| Biglari Holdings |
Ark Restaurants and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ark Restaurants and Biglari Holdings
The main advantage of trading using opposite Ark Restaurants and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.| Ark Restaurants vs. Nathans Famous | Ark Restaurants vs. Flanigans Enterprises | Ark Restaurants vs. Good Times Restaurants | Ark Restaurants vs. Auburn National Bancorporation |
| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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