Correlation Between Biglari Holdings and Wendys
Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and Wendys 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 Wendys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and The Wendys Co, you can compare the effects of market volatilities on Biglari Holdings and Wendys 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 Wendys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Wendys.
Diversification Opportunities for Biglari Holdings and Wendys
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Biglari and Wendys is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and The Wendys Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Wendys 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 Wendys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Wendys has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Wendys go up and down completely randomly.
Pair Corralation between Biglari Holdings and Wendys
Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.5 times more return on investment than Wendys. However, Biglari Holdings is 1.5 times more volatile than The Wendys Co. It trades about 0.04 of its potential returns per unit of risk. The Wendys Co is currently generating about -0.02 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biglari Holdings vs. The Wendys Co
Performance |
| Timeline |
| Biglari Holdings |
| The Wendys |
Biglari Holdings and Wendys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biglari Holdings and Wendys
The main advantage of trading using opposite Biglari Holdings and Wendys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Wendys 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 Wendys will offset losses from the drop in Wendys' 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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