Correlation Between Fairfax Financial and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Fairfax Financial 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 Fairfax Financial and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fairfax Financial Holdings and Biglari Holdings, you can compare the effects of market volatilities on Fairfax Financial 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 Fairfax Financial with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairfax Financial and Biglari Holdings.
Diversification Opportunities for Fairfax Financial and Biglari Holdings
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fairfax and Biglari is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fairfax Financial Holdings and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Fairfax Financial 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 Fairfax Financial 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 Fairfax Financial i.e., Fairfax Financial and Biglari Holdings go up and down completely randomly.
Pair Corralation between Fairfax Financial and Biglari Holdings
Assuming the 90 days horizon Fairfax Financial Holdings is expected to generate 0.34 times more return on investment than Biglari Holdings. However, Fairfax Financial Holdings is 2.97 times less risky than Biglari Holdings. It trades about 0.1 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.03 per unit of risk. If you would invest 1,379 in Fairfax Financial Holdings on September 12, 2024 and sell it today you would earn a total of 397.00 from holding Fairfax Financial Holdings or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fairfax Financial Holdings vs. Biglari Holdings
Performance |
| Timeline |
| Fairfax Financial |
| Biglari Holdings |
Fairfax Financial and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fairfax Financial and Biglari Holdings
The main advantage of trading using opposite Fairfax Financial and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairfax Financial 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.| Fairfax Financial vs. Root Inc | Fairfax Financial vs. Bank of America | Fairfax Financial vs. Aerovate Therapeutics | Fairfax Financial vs. SoundHound AI |
| Biglari Holdings vs. Noble Romans | Biglari Holdings vs. Good Times Restaurants | Biglari Holdings vs. Flanigans Enterprises | Biglari Holdings vs. FAT Brands |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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