Correlation Between Biglari Holdings and Victorias Secret
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Victorias Secret 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 Victorias Secret into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and Victorias Secret Co, you can compare the effects of market volatilities on Biglari Holdings and Victorias Secret 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 Victorias Secret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Victorias Secret.
Diversification Opportunities for Biglari Holdings and Victorias Secret
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biglari and Victorias is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Victorias Secret Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victorias Secret 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 Victorias Secret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victorias Secret has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Victorias Secret go up and down completely randomly.
Pair Corralation between Biglari Holdings and Victorias Secret
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.54 times more return on investment than Victorias Secret. However, Biglari Holdings is 1.87 times less risky than Victorias Secret. It trades about 0.05 of its potential returns per unit of risk. Victorias Secret Co is currently generating about 0.01 per unit of risk. If you would invest 14,183 in Biglari Holdings on August 26, 2024 and sell it today you would earn a total of 6,458 from holding Biglari Holdings or generate 45.53% 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. Victorias Secret Co
Performance |
| Timeline |
| Biglari Holdings |
| Victorias Secret |
Biglari Holdings and Victorias Secret Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Victorias Secret
The main advantage of trading using opposite Biglari Holdings and Victorias Secret positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Victorias Secret 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 Victorias Secret will offset losses from the drop in Victorias Secret's long position.The idea behind Biglari Holdings and Victorias Secret Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Victorias Secret vs. Ross Stores | Victorias Secret vs. Childrens Place | Victorias Secret vs. Buckle Inc | Victorias Secret vs. Guess Inc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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