Correlation Between Biglari Holdings and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and BJs Restaurants, you can compare the effects of market volatilities on Biglari Holdings and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and BJs Restaurants.
Diversification Opportunities for Biglari Holdings and BJs Restaurants
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Biglari and BJs is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and BJs Restaurants go up and down completely randomly.
Pair Corralation between Biglari Holdings and BJs Restaurants
Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the BJs Restaurants. In addition to that, Biglari Holdings is 1.56 times more volatile than BJs Restaurants. It trades about -0.32 of its total potential returns per unit of risk. BJs Restaurants is currently generating about -0.05 per unit of volatility. If you would invest 3,485 in BJs Restaurants on October 22, 2024 and sell it today you would lose (55.00) from holding BJs Restaurants or give up 1.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. BJs Restaurants
Performance |
| Timeline |
| Biglari Holdings |
| BJs Restaurants |
Biglari Holdings and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and BJs Restaurants
The main advantage of trading using opposite Biglari Holdings and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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