Correlation Between SNDL and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both SNDL 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 SNDL and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SNDL Inc and Biglari Holdings, you can compare the effects of market volatilities on SNDL 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 SNDL with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SNDL and Biglari Holdings.
Diversification Opportunities for SNDL and Biglari Holdings
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SNDL and Biglari is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and SNDL 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 SNDL 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 SNDL i.e., SNDL and Biglari Holdings go up and down completely randomly.
Pair Corralation between SNDL and Biglari Holdings
Given the investment horizon of 90 days SNDL Inc is expected to under-perform the Biglari Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SNDL Inc is 1.13 times less risky than Biglari Holdings. The stock trades about -0.2 of its potential returns per unit of risk. The Biglari Holdings is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 24,996 in Biglari Holdings on November 3, 2024 and sell it today you would lose (1,795) from holding Biglari Holdings or give up 7.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SNDL Inc vs. Biglari Holdings
Performance |
| Timeline |
| SNDL Inc |
| Biglari Holdings |
SNDL and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SNDL and Biglari Holdings
The main advantage of trading using opposite SNDL and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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 SNDL 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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