Correlation Between Smart Share and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Smart Share 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 Smart Share and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Share Global and Biglari Holdings, you can compare the effects of market volatilities on Smart Share 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 Smart Share with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and Biglari Holdings.
Diversification Opportunities for Smart Share and Biglari Holdings
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Smart and Biglari is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Smart Share 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 Smart Share Global 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 Smart Share i.e., Smart Share and Biglari Holdings go up and down completely randomly.
Pair Corralation between Smart Share and Biglari Holdings
Allowing for the 90-day total investment horizon Smart Share is expected to generate 11.69 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Smart Share Global is 1.26 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 0.36 of returns per unit of risk over similar time horizon. If you would invest 17,300 in Biglari Holdings on September 4, 2024 and sell it today you would earn a total of 4,304 from holding Biglari Holdings or generate 24.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smart Share Global vs. Biglari Holdings
Performance |
| Timeline |
| Smart Share Global |
| Biglari Holdings |
Smart Share and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Share and Biglari Holdings
The main advantage of trading using opposite Smart Share and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Share 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.| Smart Share vs. Frontdoor | Smart Share vs. Bright Horizons Family | Smart Share vs. Mister Car Wash | Smart Share vs. Carriage Services |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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