Correlation Between Darden Restaurants and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Darden Restaurants 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 Darden Restaurants and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darden Restaurants and Biglari Holdings, you can compare the effects of market volatilities on Darden Restaurants 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 Darden Restaurants with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darden Restaurants and Biglari Holdings.
Diversification Opportunities for Darden Restaurants and Biglari Holdings
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Darden and Biglari is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Darden Restaurants and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Darden Restaurants 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 Darden Restaurants 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 Darden Restaurants i.e., Darden Restaurants and Biglari Holdings go up and down completely randomly.
Pair Corralation between Darden Restaurants and Biglari Holdings
Considering the 90-day investment horizon Darden Restaurants is expected to generate 1.79 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Darden Restaurants is 1.62 times less risky than Biglari Holdings. It trades about 0.04 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14,186 in Biglari Holdings on August 27, 2024 and sell it today you would earn a total of 6,455 from holding Biglari Holdings or generate 45.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darden Restaurants vs. Biglari Holdings
Performance |
| Timeline |
| Darden Restaurants |
| Biglari Holdings |
Darden Restaurants and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darden Restaurants and Biglari Holdings
The main advantage of trading using opposite Darden Restaurants and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darden Restaurants 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.| Darden Restaurants vs. Dine Brands Global | Darden Restaurants vs. Bloomin Brands | Darden Restaurants vs. BJs Restaurants | Darden Restaurants vs. The Cheesecake Factory |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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