Correlation Between Biglari Holdings and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Burlington Stores 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 Burlington Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Burlington Stores, you can compare the effects of market volatilities on Biglari Holdings and Burlington Stores 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Burlington Stores.
Diversification Opportunities for Biglari Holdings and Burlington Stores
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biglari and Burlington is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Burlington Stores go up and down completely randomly.
Pair Corralation between Biglari Holdings and Burlington Stores
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.87 times more return on investment than Burlington Stores. However, Biglari Holdings is 1.15 times less risky than Burlington Stores. It trades about 0.05 of its potential returns per unit of risk. Burlington Stores is currently generating about 0.03 per unit of risk. If you would invest 14,624 in Biglari Holdings on September 3, 2024 and sell it today you would earn a total of 6,980 from holding Biglari Holdings or generate 47.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Burlington Stores
Performance |
| Timeline |
| Biglari Holdings |
| Burlington Stores |
Biglari Holdings and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Burlington Stores
The main advantage of trading using opposite Biglari Holdings and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Burlington Stores 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| Biglari Holdings vs. Highway Holdings Limited | Biglari Holdings vs. QCR Holdings | Biglari Holdings vs. Partner Communications | Biglari Holdings vs. Acumen Pharmaceuticals |
| Burlington Stores vs. The TJX Companies | Burlington Stores vs. Guess Inc | Burlington Stores vs. Urban Outfitters | Burlington Stores vs. Childrens Place |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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