Correlation Between Biglari Holdings and Arcos Dorados
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Arcos Dorados 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 Arcos Dorados into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Arcos Dorados Holdings, you can compare the effects of market volatilities on Biglari Holdings and Arcos Dorados 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 Arcos Dorados. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Arcos Dorados.
Diversification Opportunities for Biglari Holdings and Arcos Dorados
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Biglari and Arcos is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Arcos Dorados Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcos Dorados Holdings 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 Arcos Dorados. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcos Dorados Holdings has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Arcos Dorados go up and down completely randomly.
Pair Corralation between Biglari Holdings and Arcos Dorados
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.98 times more return on investment than Arcos Dorados. However, Biglari Holdings is 1.02 times less risky than Arcos Dorados. It trades about 0.05 of its potential returns per unit of risk. Arcos Dorados Holdings is currently generating about 0.02 per unit of risk. If you would invest 14,049 in Biglari Holdings on September 4, 2024 and sell it today you would earn a total of 7,555 from holding Biglari Holdings or generate 53.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Arcos Dorados Holdings
Performance |
| Timeline |
| Biglari Holdings |
| Arcos Dorados Holdings |
Biglari Holdings and Arcos Dorados Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Arcos Dorados
The main advantage of trading using opposite Biglari Holdings and Arcos Dorados positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Arcos Dorados 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 Arcos Dorados will offset losses from the drop in Arcos Dorados' long position.| Biglari Holdings vs. Hyatt Hotels | Biglari Holdings vs. Smart Share Global | Biglari Holdings vs. Sweetgreen | Biglari Holdings vs. Wyndham Hotels Resorts |
| Arcos Dorados vs. Hyatt Hotels | Arcos Dorados vs. Smart Share Global | Arcos Dorados vs. Sweetgreen | Arcos Dorados vs. Wyndham Hotels Resorts |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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