Correlation Between Biglari Holdings and AMREP
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and AMREP 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 AMREP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and AMREP, you can compare the effects of market volatilities on Biglari Holdings and AMREP 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 AMREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and AMREP.
Diversification Opportunities for Biglari Holdings and AMREP
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Biglari and AMREP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP 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 AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and AMREP go up and down completely randomly.
Pair Corralation between Biglari Holdings and AMREP
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.09 times less return on investment than AMREP. But when comparing it to its historical volatility, Biglari Holdings is 1.39 times less risky than AMREP. It trades about 0.06 of its potential returns per unit of risk. AMREP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,136 in AMREP on September 14, 2024 and sell it today you would earn a total of 2,413 from holding AMREP or generate 212.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Biglari Holdings vs. AMREP
Performance |
| Timeline |
| Biglari Holdings |
| AMREP |
Biglari Holdings and AMREP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and AMREP
The main advantage of trading using opposite Biglari Holdings and AMREP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, AMREP 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 AMREP will offset losses from the drop in AMREP's long position.The idea behind Biglari Holdings and AMREP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AMREP vs. Landsea Homes Corp | AMREP vs. Forestar Group | AMREP vs. Five Point Holdings | AMREP vs. American Realty Investors |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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