Correlation Between Biglari Holdings and Choice Hotels
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Choice Hotels 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 Choice Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Choice Hotels International, you can compare the effects of market volatilities on Biglari Holdings and Choice Hotels 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 Choice Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Choice Hotels.
Diversification Opportunities for Biglari Holdings and Choice Hotels
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Choice is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Choice Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Hotels Intern 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 Choice Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Hotels Intern has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Choice Hotels go up and down completely randomly.
Pair Corralation between Biglari Holdings and Choice Hotels
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.68 times more return on investment than Choice Hotels. However, Biglari Holdings is 2.68 times more volatile than Choice Hotels International. It trades about 0.35 of its potential returns per unit of risk. Choice Hotels International is currently generating about 0.28 per unit of risk. If you would invest 17,279 in Biglari Holdings on August 30, 2024 and sell it today you would earn a total of 4,221 from holding Biglari Holdings or generate 24.43% 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. Choice Hotels International
Performance |
| Timeline |
| Biglari Holdings |
| Choice Hotels Intern |
Biglari Holdings and Choice Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Choice Hotels
The main advantage of trading using opposite Biglari Holdings and Choice Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Choice Hotels 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 Choice Hotels will offset losses from the drop in Choice Hotels' long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Choice Hotels vs. Hyatt Hotels | Choice Hotels vs. Hilton Worldwide Holdings | Choice Hotels vs. InterContinental Hotels Group | Choice Hotels vs. Marriott International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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