Correlation Between Biglari Holdings and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Merit Medical 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 Merit Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Merit Medical Systems, you can compare the effects of market volatilities on Biglari Holdings and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Merit Medical.
Diversification Opportunities for Biglari Holdings and Merit Medical
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Merit is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Merit Medical go up and down completely randomly.
Pair Corralation between Biglari Holdings and Merit Medical
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.04 times more return on investment than Merit Medical. However, Biglari Holdings is 2.04 times more volatile than Merit Medical Systems. It trades about 0.34 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.24 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. Merit Medical Systems
Performance |
| Timeline |
| Biglari Holdings |
| Merit Medical Systems |
Biglari Holdings and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Merit Medical
The main advantage of trading using opposite Biglari Holdings and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Biglari Holdings vs. Chipotle Mexican Grill | Biglari Holdings vs. Yum Brands | Biglari Holdings vs. The Wendys Co | Biglari Holdings vs. McDonalds |
| Merit Medical vs. ReShape Lifesciences | Merit Medical vs. Bone Biologics Corp | Merit Medical vs. Tivic Health Systems | Merit Medical vs. Nuwellis |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |