Correlation Between Potbelly and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Potbelly 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 Potbelly and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and Biglari Holdings, you can compare the effects of market volatilities on Potbelly 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 Potbelly with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and Biglari Holdings.
Diversification Opportunities for Potbelly and Biglari Holdings
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Potbelly and Biglari is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Potbelly 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 Potbelly Co 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 Potbelly i.e., Potbelly and Biglari Holdings go up and down completely randomly.
Pair Corralation between Potbelly and Biglari Holdings
Given the investment horizon of 90 days Potbelly Co is expected to generate 1.81 times more return on investment than Biglari Holdings. However, Potbelly is 1.81 times more volatile than Biglari Holdings. It trades about 0.27 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.34 per unit of risk. If you would invest 767.00 in Potbelly Co on August 30, 2024 and sell it today you would earn a total of 253.00 from holding Potbelly Co or generate 32.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Potbelly Co vs. Biglari Holdings
Performance |
| Timeline |
| Potbelly |
| Biglari Holdings |
Potbelly and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potbelly and Biglari Holdings
The main advantage of trading using opposite Potbelly and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly 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.| Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality | Potbelly vs. El Pollo Loco |
| Biglari Holdings vs. Chipotle Mexican Grill | Biglari Holdings vs. Yum Brands | Biglari Holdings vs. The Wendys Co | Biglari Holdings vs. McDonalds |
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 Stocks Directory module to find actively traded stocks across global markets.
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