Correlation Between Biglari Holdings and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Diageo PLC 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 Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Diageo PLC ADR, you can compare the effects of market volatilities on Biglari Holdings and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Diageo PLC.
Diversification Opportunities for Biglari Holdings and Diageo PLC
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Biglari and Diageo is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Diageo PLC go up and down completely randomly.
Pair Corralation between Biglari Holdings and Diageo PLC
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.68 times more return on investment than Diageo PLC. However, Biglari Holdings is 2.68 times more volatile than Diageo PLC ADR. It trades about 0.35 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.16 per unit of risk. If you would invest 17,031 in Biglari Holdings on September 1, 2024 and sell it today you would earn a total of 4,012 from holding Biglari Holdings or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Diageo PLC ADR
Performance |
| Timeline |
| Biglari Holdings |
| Diageo PLC ADR |
Biglari Holdings and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Diageo PLC
The main advantage of trading using opposite Biglari Holdings and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Diageo PLC vs. Brown Forman | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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