Correlation Between Avadel Pharmaceuticals and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Avadel Pharmaceuticals 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 Avadel Pharmaceuticals and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avadel Pharmaceuticals PLC and Biglari Holdings, you can compare the effects of market volatilities on Avadel Pharmaceuticals 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 Avadel Pharmaceuticals with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avadel Pharmaceuticals and Biglari Holdings.
Diversification Opportunities for Avadel Pharmaceuticals and Biglari Holdings
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avadel and Biglari is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Avadel Pharmaceuticals PLC and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Avadel Pharmaceuticals 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 Avadel Pharmaceuticals PLC 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 Avadel Pharmaceuticals i.e., Avadel Pharmaceuticals and Biglari Holdings go up and down completely randomly.
Pair Corralation between Avadel Pharmaceuticals and Biglari Holdings
Given the investment horizon of 90 days Avadel Pharmaceuticals PLC is expected to under-perform the Biglari Holdings. In addition to that, Avadel Pharmaceuticals is 1.75 times more volatile than Biglari Holdings. It trades about -0.27 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.35 per unit of volatility. If you would invest 17,031 in Biglari Holdings on September 1, 2024 and sell it today you would earn a total of 4,012 from holding Biglari Holdings or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avadel Pharmaceuticals PLC vs. Biglari Holdings
Performance |
| Timeline |
| Avadel Pharmaceuticals |
| Biglari Holdings |
Avadel Pharmaceuticals and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avadel Pharmaceuticals and Biglari Holdings
The main advantage of trading using opposite Avadel Pharmaceuticals and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avadel Pharmaceuticals 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.| Avadel Pharmaceuticals vs. Neurocrine Biosciences | Avadel Pharmaceuticals vs. Ironwood Pharmaceuticals | Avadel Pharmaceuticals vs. Alkermes Plc | Avadel Pharmaceuticals vs. Intracellular Th |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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