Correlation Between Biglari Holdings and Prestige Wealth
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Prestige Wealth 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 Prestige Wealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Prestige Wealth Ordinary, you can compare the effects of market volatilities on Biglari Holdings and Prestige Wealth 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 Prestige Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Prestige Wealth.
Diversification Opportunities for Biglari Holdings and Prestige Wealth
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Prestige is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Prestige Wealth Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Wealth Ordinary 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 Prestige Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Wealth Ordinary has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Prestige Wealth go up and down completely randomly.
Pair Corralation between Biglari Holdings and Prestige Wealth
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 4.25 times less return on investment than Prestige Wealth. But when comparing it to its historical volatility, Biglari Holdings is 8.13 times less risky than Prestige Wealth. It trades about 0.06 of its potential returns per unit of risk. Prestige Wealth Ordinary is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 540.00 in Prestige Wealth Ordinary on September 12, 2024 and sell it today you would lose (372.00) from holding Prestige Wealth Ordinary or give up 68.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.33% |
| Values | Daily Returns |
Biglari Holdings vs. Prestige Wealth Ordinary
Performance |
| Timeline |
| Biglari Holdings |
| Prestige Wealth Ordinary |
Biglari Holdings and Prestige Wealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Prestige Wealth
The main advantage of trading using opposite Biglari Holdings and Prestige Wealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Prestige Wealth 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 Prestige Wealth will offset losses from the drop in Prestige Wealth's long position.| Biglari Holdings vs. Noble Romans | Biglari Holdings vs. Good Times Restaurants | Biglari Holdings vs. Flanigans Enterprises | Biglari Holdings vs. FAT Brands |
| Prestige Wealth vs. Valneva SE ADR | Prestige Wealth vs. Chipotle Mexican Grill | Prestige Wealth vs. Amkor Technology | Prestige Wealth vs. Biglari Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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