Correlation Between RCI Hospitality and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both RCI Hospitality 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 RCI Hospitality and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCI Hospitality Holdings and Biglari Holdings, you can compare the effects of market volatilities on RCI Hospitality 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 RCI Hospitality with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Biglari Holdings.
Diversification Opportunities for RCI Hospitality and Biglari Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RCI and Biglari is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and RCI Hospitality 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 RCI Hospitality 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 RCI Hospitality i.e., RCI Hospitality and Biglari Holdings go up and down completely randomly.
Pair Corralation between RCI Hospitality and Biglari Holdings
Given the investment horizon of 90 days RCI Hospitality is expected to generate 1.23 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, RCI Hospitality Holdings is 1.04 times less risky than Biglari Holdings. It trades about 0.11 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 17,201 in Biglari Holdings on November 2, 2024 and sell it today you would earn a total of 6,185 from holding Biglari Holdings or generate 35.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RCI Hospitality Holdings vs. Biglari Holdings
Performance |
| Timeline |
| RCI Hospitality Holdings |
| Biglari Holdings |
RCI Hospitality and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCI Hospitality and Biglari Holdings
The main advantage of trading using opposite RCI Hospitality and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCI Hospitality 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.| RCI Hospitality vs. Brinker International | RCI Hospitality vs. Bloomin Brands | RCI Hospitality vs. BJs Restaurants | RCI Hospitality vs. Dennys Corp |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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