Correlation Between Biglari Holdings and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Texas Roadhouse 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 Texas Roadhouse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Texas Roadhouse, you can compare the effects of market volatilities on Biglari Holdings and Texas Roadhouse 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 Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Texas Roadhouse.
Diversification Opportunities for Biglari Holdings and Texas Roadhouse
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Texas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse 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 Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Texas Roadhouse go up and down completely randomly.
Pair Corralation between Biglari Holdings and Texas Roadhouse
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.46 times less return on investment than Texas Roadhouse. In addition to that, Biglari Holdings is 1.49 times more volatile than Texas Roadhouse. It trades about 0.07 of its total potential returns per unit of risk. Texas Roadhouse is currently generating about 0.15 per unit of volatility. If you would invest 12,430 in Texas Roadhouse on August 28, 2024 and sell it today you would earn a total of 7,782 from holding Texas Roadhouse or generate 62.61% 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. Texas Roadhouse
Performance |
| Timeline |
| Biglari Holdings |
| Texas Roadhouse |
Biglari Holdings and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Texas Roadhouse
The main advantage of trading using opposite Biglari Holdings and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Texas Roadhouse 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 Texas Roadhouse will offset losses from the drop in Texas Roadhouse's long position.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
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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