Correlation Between Biglari Holdings and Noble Romans
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Noble Romans 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 Noble Romans into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Noble Romans, you can compare the effects of market volatilities on Biglari Holdings and Noble Romans 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 Noble Romans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Noble Romans.
Diversification Opportunities for Biglari Holdings and Noble Romans
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Biglari and Noble is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Noble Romans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Romans 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 Noble Romans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Romans has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Noble Romans go up and down completely randomly.
Pair Corralation between Biglari Holdings and Noble Romans
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.6 times less return on investment than Noble Romans. But when comparing it to its historical volatility, Biglari Holdings is 3.48 times less risky than Noble Romans. It trades about 0.07 of its potential returns per unit of risk. Noble Romans is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Noble Romans on August 24, 2024 and sell it today you would earn a total of 9.00 from holding Noble Romans or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Biglari Holdings vs. Noble Romans
Performance |
| Timeline |
| Biglari Holdings |
| Noble Romans |
Biglari Holdings and Noble Romans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Noble Romans
The main advantage of trading using opposite Biglari Holdings and Noble Romans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Noble Romans 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 Noble Romans will offset losses from the drop in Noble Romans' long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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