Correlation Between Biglari Holdings and PulteGroup
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and PulteGroup 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 PulteGroup into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and PulteGroup, you can compare the effects of market volatilities on Biglari Holdings and PulteGroup 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 PulteGroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and PulteGroup.
Diversification Opportunities for Biglari Holdings and PulteGroup
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Biglari and PulteGroup is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and PulteGroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PulteGroup 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 PulteGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PulteGroup has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and PulteGroup go up and down completely randomly.
Pair Corralation between Biglari Holdings and PulteGroup
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.43 times less return on investment than PulteGroup. In addition to that, Biglari Holdings is 1.09 times more volatile than PulteGroup. It trades about 0.05 of its total potential returns per unit of risk. PulteGroup is currently generating about 0.13 per unit of volatility. If you would invest 4,295 in PulteGroup on August 24, 2024 and sell it today you would earn a total of 8,681 from holding PulteGroup or generate 202.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. PulteGroup
Performance |
| Timeline |
| Biglari Holdings |
| PulteGroup |
Biglari Holdings and PulteGroup Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and PulteGroup
The main advantage of trading using opposite Biglari Holdings and PulteGroup positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, PulteGroup 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 PulteGroup will offset losses from the drop in PulteGroup's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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