Correlation Between Biglari Holdings and Mechel OAO
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Mechel OAO 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 Mechel OAO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Mechel OAO, you can compare the effects of market volatilities on Biglari Holdings and Mechel OAO 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 Mechel OAO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Mechel OAO.
Diversification Opportunities for Biglari Holdings and Mechel OAO
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Biglari and Mechel is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Mechel OAO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechel OAO 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 Mechel OAO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechel OAO has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Mechel OAO go up and down completely randomly.
Pair Corralation between Biglari Holdings and Mechel OAO
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.08 times more return on investment than Mechel OAO. However, Biglari Holdings is 12.82 times less risky than Mechel OAO. It trades about 0.05 of its potential returns per unit of risk. Mechel OAO is currently generating about -0.27 per unit of risk. If you would invest 13,999 in Biglari Holdings on September 3, 2024 and sell it today you would earn a total of 7,605 from holding Biglari Holdings or generate 54.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 2.83% |
| Values | Daily Returns |
Biglari Holdings vs. Mechel OAO
Performance |
| Timeline |
| Biglari Holdings |
| Mechel OAO |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Biglari Holdings and Mechel OAO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Mechel OAO
The main advantage of trading using opposite Biglari Holdings and Mechel OAO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Mechel OAO 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 Mechel OAO will offset losses from the drop in Mechel OAO's long position.| Biglari Holdings vs. Highway Holdings Limited | Biglari Holdings vs. QCR Holdings | Biglari Holdings vs. Partner Communications | Biglari Holdings vs. Acumen Pharmaceuticals |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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