Correlation Between Biglari Holdings and Fomento Economico
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Fomento Economico 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 Fomento Economico into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Fomento Economico Mexicano, you can compare the effects of market volatilities on Biglari Holdings and Fomento Economico 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 Fomento Economico. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Fomento Economico.
Diversification Opportunities for Biglari Holdings and Fomento Economico
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Biglari and Fomento is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Fomento Economico Mexicano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fomento Economico 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 Fomento Economico. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fomento Economico has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Fomento Economico go up and down completely randomly.
Pair Corralation between Biglari Holdings and Fomento Economico
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.04 times more return on investment than Fomento Economico. However, Biglari Holdings is 1.04 times more volatile than Fomento Economico Mexicano. It trades about 0.32 of its potential returns per unit of risk. Fomento Economico Mexicano is currently generating about -0.05 per unit of risk. If you would invest 21,000 in Biglari Holdings on September 19, 2024 and sell it today you would earn a total of 2,624 from holding Biglari Holdings or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Fomento Economico Mexicano
Performance |
| Timeline |
| Biglari Holdings |
| Fomento Economico |
Biglari Holdings and Fomento Economico Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Fomento Economico
The main advantage of trading using opposite Biglari Holdings and Fomento Economico positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Fomento Economico 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 Fomento Economico will offset losses from the drop in Fomento Economico's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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