Correlation Between Biglari Holdings and Carnival
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Carnival 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 Carnival into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Carnival, you can compare the effects of market volatilities on Biglari Holdings and Carnival 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 Carnival. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Carnival.
Diversification Opportunities for Biglari Holdings and Carnival
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Carnival is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Carnival go up and down completely randomly.
Pair Corralation between Biglari Holdings and Carnival
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.43 times more return on investment than Carnival. However, Biglari Holdings is 1.43 times more volatile than Carnival. It trades about 0.35 of its potential returns per unit of risk. Carnival is currently generating about 0.29 per unit of risk. If you would invest 17,300 in Biglari Holdings on August 31, 2024 and sell it today you would earn a total of 4,200 from holding Biglari Holdings or generate 24.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Carnival
Performance |
| Timeline |
| Biglari Holdings |
| Carnival |
Biglari Holdings and Carnival Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Carnival
The main advantage of trading using opposite Biglari Holdings and Carnival positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Carnival 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 Carnival will offset losses from the drop in Carnival's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Carnival vs. Royal Caribbean Cruises | Carnival vs. Airbnb Inc | Carnival vs. Expedia Group | Carnival vs. Booking Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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