Correlation Between Life Time and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Life Time 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 Life Time and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Time Group and Biglari Holdings, you can compare the effects of market volatilities on Life Time 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 Life Time with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Biglari Holdings.
Diversification Opportunities for Life Time and Biglari Holdings
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Life and Biglari is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Life Time 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 Life Time Group 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 Life Time i.e., Life Time and Biglari Holdings go up and down completely randomly.
Pair Corralation between Life Time and Biglari Holdings
Considering the 90-day investment horizon Life Time Group is expected to under-perform the Biglari Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Life Time Group is 1.98 times less risky than Biglari Holdings. The stock trades about -0.16 of its potential returns per unit of risk. The Biglari Holdings is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 17,453 in Biglari Holdings on September 12, 2024 and sell it today you would earn a total of 5,407 from holding Biglari Holdings or generate 30.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Time Group vs. Biglari Holdings
Performance |
| Timeline |
| Life Time Group |
| Biglari Holdings |
Life Time and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Time and Biglari Holdings
The main advantage of trading using opposite Life Time and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Time 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.| Life Time vs. Planet Fitness | Life Time vs. Bowlero Corp | Life Time vs. JAKKS Pacific | Life Time vs. Acushnet Holdings Corp |
| 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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