Correlation Between Biglari Holdings and Playtech Plc
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Playtech Plc 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 Playtech Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Playtech plc, you can compare the effects of market volatilities on Biglari Holdings and Playtech Plc 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 Playtech Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Playtech Plc.
Diversification Opportunities for Biglari Holdings and Playtech Plc
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biglari and Playtech is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Playtech plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtech plc 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 Playtech Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtech plc has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Playtech Plc go up and down completely randomly.
Pair Corralation between Biglari Holdings and Playtech Plc
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.8 times more return on investment than Playtech Plc. However, Biglari Holdings is 1.25 times less risky than Playtech Plc. It trades about 0.2 of its potential returns per unit of risk. Playtech plc is currently generating about 0.1 per unit of risk. If you would invest 17,125 in Biglari Holdings on September 4, 2024 and sell it today you would earn a total of 5,275 from holding Biglari Holdings or generate 30.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Playtech plc
Performance |
| Timeline |
| Biglari Holdings |
| Playtech plc |
Biglari Holdings and Playtech Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Playtech Plc
The main advantage of trading using opposite Biglari Holdings and Playtech Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Playtech Plc 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 Playtech Plc will offset losses from the drop in Playtech Plc's long position.| Biglari Holdings vs. Hyatt Hotels | Biglari Holdings vs. Smart Share Global | Biglari Holdings vs. Sweetgreen | Biglari Holdings vs. Wyndham Hotels Resorts |
| Playtech Plc vs. Everi Holdings | Playtech Plc vs. Intema Solutions | Playtech Plc vs. Light Wonder | Playtech Plc vs. International Game Technology |
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 CEOs Directory module to screen CEOs from public companies around the world.
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