Correlation Between Biglari Holdings and Royalty Management
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Royalty Management 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 Royalty Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Royalty Management Holding, you can compare the effects of market volatilities on Biglari Holdings and Royalty Management 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 Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Royalty Management.
Diversification Opportunities for Biglari Holdings and Royalty Management
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biglari and Royalty is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Royalty Management go up and down completely randomly.
Pair Corralation between Biglari Holdings and Royalty Management
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.78 times more return on investment than Royalty Management. However, Biglari Holdings is 1.28 times less risky than Royalty Management. It trades about 0.36 of its potential returns per unit of risk. Royalty Management Holding is currently generating about -0.12 per unit of risk. If you would invest 17,300 in Biglari Holdings on September 4, 2024 and sell it today you would earn a total of 4,304 from holding Biglari Holdings or generate 24.88% 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. Royalty Management Holding
Performance |
| Timeline |
| Biglari Holdings |
| Royalty Management |
Biglari Holdings and Royalty Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Royalty Management
The main advantage of trading using opposite Biglari Holdings and Royalty Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Royalty Management 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 Royalty Management will offset losses from the drop in Royalty Management's long position.| Biglari Holdings vs. Hyatt Hotels | Biglari Holdings vs. Smart Share Global | Biglari Holdings vs. Sweetgreen | Biglari Holdings vs. Wyndham Hotels Resorts |
| Royalty Management vs. Biglari Holdings | Royalty Management vs. Boyd Gaming | Royalty Management vs. JJill Inc | Royalty Management vs. Boot Barn 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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