Correlation Between Cannae Holdings and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Cannae Holdings and Biglari Holdings 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 Cannae Holdings and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cannae Holdings and Biglari Holdings, you can compare the effects of market volatilities on Cannae Holdings and Biglari Holdings 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 Cannae Holdings with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cannae Holdings and Biglari Holdings.
Diversification Opportunities for Cannae Holdings and Biglari Holdings
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cannae and Biglari is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cannae Holdings and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Cannae 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 Cannae Holdings are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Cannae Holdings i.e., Cannae Holdings and Biglari Holdings go up and down completely randomly.
Pair Corralation between Cannae Holdings and Biglari Holdings
Given the investment horizon of 90 days Cannae Holdings is expected to generate 1.7 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Cannae Holdings is 1.65 times less risky than Biglari Holdings. It trades about 0.3 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 17,261 in Biglari Holdings on August 28, 2024 and sell it today you would earn a total of 3,437 from holding Biglari Holdings or generate 19.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cannae Holdings vs. Biglari Holdings
Performance |
| Timeline |
| Cannae Holdings |
| Biglari Holdings |
Cannae Holdings and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cannae Holdings and Biglari Holdings
The main advantage of trading using opposite Cannae Holdings and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cannae Holdings position performs unexpectedly, Biglari Holdings 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 Biglari Holdings will offset losses from the drop in Biglari Holdings' long position.| Cannae Holdings vs. Brightsphere Investment Group | Cannae Holdings vs. Adtalem Global Education | Cannae Holdings vs. ConnectOne Bancorp | Cannae Holdings vs. Aquagold International |
| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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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