Correlation Between Flanigans Enterprises and Biglari Holdings

Can any of the company-specific risk be diversified away by investing in both Flanigans Enterprises 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 Flanigans Enterprises and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flanigans Enterprises and Biglari Holdings, you can compare the effects of market volatilities on Flanigans Enterprises 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 Flanigans Enterprises with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flanigans Enterprises and Biglari Holdings.

Diversification Opportunities for Flanigans Enterprises and Biglari Holdings

-0.61

Correlation Coefficient

Flanigans Enterprises  Biglari Holdings

Excellent diversification

The 3 months correlation between Flanigans and Biglari is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Flanigans Enterprises and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Flanigans Enterprises 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 Flanigans Enterprises 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 Flanigans Enterprises i.e., Flanigans Enterprises and Biglari Holdings go up and down completely randomly.

Pair Corralation between Flanigans Enterprises and Biglari Holdings

Considering the 90-day investment horizon Flanigans Enterprises is expected to generate 10.47 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Flanigans Enterprises is 3.0 times less risky than Biglari Holdings. It trades about 0.06 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  107,501  in Biglari Holdings on September 29, 2024 and sell it today you would earn a total of  19,331  from holding Biglari Holdings or generate 17.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Flanigans Enterprises  vs.  Biglari Holdings

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Flanigans Enterprises is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Biglari Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Biglari Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flanigans Enterprises and Biglari Holdings

The main advantage of trading using opposite Flanigans Enterprises and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flanigans Enterprises 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 Flanigans Enterprises 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.