Correlation Between Biglari Holdings and Air Lease
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Air Lease 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 Biglari Holdings and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Air Lease, you can compare the effects of market volatilities on Biglari Holdings and Air Lease 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 Biglari Holdings with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Air Lease.
Diversification Opportunities for Biglari Holdings and Air Lease
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biglari and Air is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Air Lease go up and down completely randomly.
Pair Corralation between Biglari Holdings and Air Lease
Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the Air Lease. In addition to that, Biglari Holdings is 1.39 times more volatile than Air Lease. It trades about -0.15 of its total potential returns per unit of risk. Air Lease is currently generating about -0.08 per unit of volatility. If you would invest 4,796 in Air Lease on November 2, 2024 and sell it today you would lose (141.00) from holding Air Lease or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Biglari Holdings vs. Air Lease
Performance |
| Timeline |
| Biglari Holdings |
| Air Lease |
Biglari Holdings and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Air Lease
The main advantage of trading using opposite Biglari Holdings and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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