Correlation Between Biglari Holdings and BW Offshore
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and BW Offshore 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 BW Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and BW Offshore Limited, you can compare the effects of market volatilities on Biglari Holdings and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and BW Offshore.
Diversification Opportunities for Biglari Holdings and BW Offshore
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biglari and BWOFY is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and BW Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore Limited 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore Limited has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and BW Offshore go up and down completely randomly.
Pair Corralation between Biglari Holdings and BW Offshore
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 16.03 times more return on investment than BW Offshore. However, Biglari Holdings is 16.03 times more volatile than BW Offshore Limited. It trades about 0.31 of its potential returns per unit of risk. BW Offshore Limited is currently generating about 0.22 per unit of risk. If you would invest 20,698 in Biglari Holdings on September 25, 2024 and sell it today you would earn a total of 4,370 from holding Biglari Holdings or generate 21.11% 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. BW Offshore Limited
Performance |
| Timeline |
| Biglari Holdings |
| BW Offshore Limited |
Biglari Holdings and BW Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and BW Offshore
The main advantage of trading using opposite Biglari Holdings and BW Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, BW Offshore 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 BW Offshore will offset losses from the drop in BW Offshore's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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