Correlation Between Biglari Holdings and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Summit Materials 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 Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Summit Materials, you can compare the effects of market volatilities on Biglari Holdings and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Summit Materials.
Diversification Opportunities for Biglari Holdings and Summit Materials
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Summit is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Summit Materials go up and down completely randomly.
Pair Corralation between Biglari Holdings and Summit Materials
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.28 times more return on investment than Summit Materials. However, Biglari Holdings is 1.28 times more volatile than Summit Materials. It trades about 0.35 of its potential returns per unit of risk. Summit Materials is currently generating about 0.16 per unit of risk. If you would invest 17,031 in Biglari Holdings on September 1, 2024 and sell it today you would earn a total of 4,012 from holding Biglari Holdings or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. Summit Materials
Performance |
| Timeline |
| Biglari Holdings |
| Summit Materials |
Biglari Holdings and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Summit Materials
The main advantage of trading using opposite Biglari Holdings and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |