Correlation Between Biglari Holdings and Shake Shack
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Shake Shack 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 Shake Shack into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Shake Shack, you can compare the effects of market volatilities on Biglari Holdings and Shake Shack 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 Shake Shack. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Shake Shack.
Diversification Opportunities for Biglari Holdings and Shake Shack
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Biglari and Shake is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Shake Shack in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shake Shack 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 Shake Shack. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shake Shack has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Shake Shack go up and down completely randomly.
Pair Corralation between Biglari Holdings and Shake Shack
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.05 times more return on investment than Shake Shack. However, Biglari Holdings is 1.05 times more volatile than Shake Shack. It trades about 0.35 of its potential returns per unit of risk. Shake Shack is currently generating about 0.26 per unit of risk. If you would invest 17,279 in Biglari Holdings on August 30, 2024 and sell it today you would earn a total of 4,221 from holding Biglari Holdings or generate 24.43% 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. Shake Shack
Performance |
| Timeline |
| Biglari Holdings |
| Shake Shack |
Biglari Holdings and Shake Shack Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Shake Shack
The main advantage of trading using opposite Biglari Holdings and Shake Shack positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Shake Shack 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 Shake Shack will offset losses from the drop in Shake Shack'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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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