Correlation Between Biglari Holdings and Caesars Entertainment
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Caesars Entertainment 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 Caesars Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Caesars Entertainment, you can compare the effects of market volatilities on Biglari Holdings and Caesars Entertainment 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 Caesars Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Caesars Entertainment.
Diversification Opportunities for Biglari Holdings and Caesars Entertainment
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Biglari and Caesars is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Caesars Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesars Entertainment 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 Caesars Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesars Entertainment has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Caesars Entertainment go up and down completely randomly.
Pair Corralation between Biglari Holdings and Caesars Entertainment
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.02 times more return on investment than Caesars Entertainment. However, Biglari Holdings is 1.02 times more volatile than Caesars Entertainment. It trades about 0.31 of its potential returns per unit of risk. Caesars Entertainment is currently generating about -0.22 per unit of risk. If you would invest 17,261 in Biglari Holdings on August 28, 2024 and sell it today you would earn a total of 3,437 from holding Biglari Holdings or generate 19.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Caesars Entertainment
Performance |
| Timeline |
| Biglari Holdings |
| Caesars Entertainment |
Biglari Holdings and Caesars Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Caesars Entertainment
The main advantage of trading using opposite Biglari Holdings and Caesars Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Caesars Entertainment 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 Caesars Entertainment will offset losses from the drop in Caesars Entertainment's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Caesars Entertainment vs. Las Vegas Sands | Caesars Entertainment vs. Wynn Resorts Limited | Caesars Entertainment vs. Penn National Gaming | Caesars Entertainment vs. Melco Resorts Entertainment |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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