Correlation Between Biglari Holdings and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Arrow Electronics 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 Arrow Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Arrow Electronics, you can compare the effects of market volatilities on Biglari Holdings and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Arrow Electronics.
Diversification Opportunities for Biglari Holdings and Arrow Electronics
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Biglari and Arrow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Arrow Electronics go up and down completely randomly.
Pair Corralation between Biglari Holdings and Arrow Electronics
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.27 times more return on investment than Arrow Electronics. However, Biglari Holdings is 1.27 times more volatile than Arrow Electronics. It trades about 0.05 of its potential returns per unit of risk. Arrow Electronics 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Arrow Electronics
Performance |
| Timeline |
| Biglari Holdings |
| Arrow Electronics |
Biglari Holdings and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Arrow Electronics
The main advantage of trading using opposite Biglari Holdings and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.| Biglari Holdings vs. Hyatt Hotels | Biglari Holdings vs. Smart Share Global | Biglari Holdings vs. Sweetgreen | Biglari Holdings vs. Wyndham Hotels Resorts |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. ScanSource | Arrow Electronics vs. PC Connection | Arrow Electronics vs. Aquagold International |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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