Correlation Between Hasbro and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Hasbro 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 Hasbro and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hasbro Inc and Biglari Holdings, you can compare the effects of market volatilities on Hasbro 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 Hasbro with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hasbro and Biglari Holdings.
Diversification Opportunities for Hasbro and Biglari Holdings
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hasbro and Biglari is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hasbro Inc and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Hasbro 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 Hasbro Inc 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 Hasbro i.e., Hasbro and Biglari Holdings go up and down completely randomly.
Pair Corralation between Hasbro and Biglari Holdings
Considering the 90-day investment horizon Hasbro is expected to generate 11.49 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Hasbro Inc is 1.07 times less risky than Biglari Holdings. It trades about 0.01 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 14,708 in Biglari Holdings on October 7, 2024 and sell it today you would earn a total of 11,068 from holding Biglari Holdings or generate 75.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hasbro Inc vs. Biglari Holdings
Performance |
| Timeline |
| Hasbro Inc |
| Biglari Holdings |
Hasbro and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hasbro and Biglari Holdings
The main advantage of trading using opposite Hasbro and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hasbro 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.The idea behind Hasbro Inc and Biglari Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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