Correlation Between Biglari Holdings and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Ross Stores, you can compare the effects of market volatilities on Biglari Holdings and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Ross Stores.
Diversification Opportunities for Biglari Holdings and Ross Stores
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Biglari and Ross is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Ross Stores go up and down completely randomly.
Pair Corralation between Biglari Holdings and Ross Stores
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.5 times more return on investment than Ross Stores. However, Biglari Holdings is 1.5 times more volatile than Ross Stores. It trades about 0.14 of its potential returns per unit of risk. Ross Stores is currently generating about 0.04 per unit of risk. If you would invest 17,899 in Biglari Holdings on August 30, 2024 and sell it today you would earn a total of 3,601 from holding Biglari Holdings or generate 20.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Ross Stores
Performance |
| Timeline |
| Biglari Holdings |
| Ross Stores |
Biglari Holdings and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Ross Stores
The main advantage of trading using opposite Biglari Holdings and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Ross Stores vs. Burlington Stores | Ross Stores vs. American Eagle Outfitters | Ross Stores vs. Lululemon Athletica | Ross Stores vs. Foot Locker |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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