Correlation Between Tokyo Electron and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Tokyo Electron 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 Tokyo Electron and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tokyo Electron and Biglari Holdings, you can compare the effects of market volatilities on Tokyo Electron 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 Tokyo Electron with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tokyo Electron and Biglari Holdings.
Diversification Opportunities for Tokyo Electron and Biglari Holdings
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tokyo and Biglari is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Tokyo Electron 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 Tokyo Electron 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 Tokyo Electron i.e., Tokyo Electron and Biglari Holdings go up and down completely randomly.
Pair Corralation between Tokyo Electron and Biglari Holdings
Assuming the 90 days horizon Tokyo Electron is expected to generate 1.42 times more return on investment than Biglari Holdings. However, Tokyo Electron is 1.42 times more volatile than Biglari Holdings. It trades about 0.04 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.05 per unit of risk. If you would invest 10,549 in Tokyo Electron on September 3, 2024 and sell it today you would earn a total of 4,479 from holding Tokyo Electron or generate 42.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tokyo Electron vs. Biglari Holdings
Performance |
| Timeline |
| Tokyo Electron |
| Biglari Holdings |
Tokyo Electron and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tokyo Electron and Biglari Holdings
The main advantage of trading using opposite Tokyo Electron and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tokyo Electron 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.| Tokyo Electron vs. Biglari Holdings | Tokyo Electron vs. ServiceNow | Tokyo Electron vs. Artisan Partners Asset | Tokyo Electron vs. Nomura Holdings ADR |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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