Correlation Between Nova Lithium and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Nova Lithium 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 Nova Lithium and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Lithium Corp and Biglari Holdings, you can compare the effects of market volatilities on Nova Lithium 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 Nova Lithium with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lithium and Biglari Holdings.
Diversification Opportunities for Nova Lithium and Biglari Holdings
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nova and Biglari is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lithium Corp and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Nova Lithium 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 Nova Lithium Corp 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 Nova Lithium i.e., Nova Lithium and Biglari Holdings go up and down completely randomly.
Pair Corralation between Nova Lithium and Biglari Holdings
Assuming the 90 days horizon Nova Lithium Corp is expected to under-perform the Biglari Holdings. In addition to that, Nova Lithium is 1.9 times more volatile than Biglari Holdings. It trades about -0.16 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.38 per unit of volatility. If you would invest 18,548 in Biglari Holdings on September 13, 2024 and sell it today you would earn a total of 4,312 from holding Biglari Holdings or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Lithium Corp vs. Biglari Holdings
Performance |
| Timeline |
| Nova Lithium Corp |
| Biglari Holdings |
Nova Lithium and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lithium and Biglari Holdings
The main advantage of trading using opposite Nova Lithium and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lithium 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.| Nova Lithium vs. Copa Holdings SA | Nova Lithium vs. United Airlines Holdings | Nova Lithium vs. Delta Air Lines | Nova Lithium vs. SkyWest |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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