Correlation Between Biglari Holdings and Ternium SA
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Ternium SA 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 Ternium SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Ternium SA ADR, you can compare the effects of market volatilities on Biglari Holdings and Ternium SA 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 Ternium SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Ternium SA.
Diversification Opportunities for Biglari Holdings and Ternium SA
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Biglari and Ternium is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Ternium SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ternium SA ADR 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 Ternium SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ternium SA ADR has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Ternium SA go up and down completely randomly.
Pair Corralation between Biglari Holdings and Ternium SA
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.29 times more return on investment than Ternium SA. However, Biglari Holdings is 1.29 times more volatile than Ternium SA ADR. It trades about 0.04 of its potential returns per unit of risk. Ternium SA ADR is currently generating about 0.0 per unit of risk. If you would invest 16,360 in Biglari Holdings on December 17, 2024 and sell it today you would earn a total of 5,296 from holding Biglari Holdings or generate 32.37% 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. Ternium SA ADR
Performance |
| Timeline |
| Biglari Holdings |
| Ternium SA ADR |
Biglari Holdings and Ternium SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Ternium SA
The main advantage of trading using opposite Biglari Holdings and Ternium SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Ternium SA 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 Ternium SA will offset losses from the drop in Ternium SA's long position.| Biglari Holdings vs. Cannae Holdings | ||
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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