Correlation Between Biglari Holdings and Bagger Daves

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

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

Diversification Opportunities for Biglari Holdings and Bagger Daves

-0.63

Correlation Coefficient

Biglari Holdings  Bagger Daves

Excellent diversification

The 3 months correlation between Biglari and Bagger is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Bagger Daves Burger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bagger Daves Burger and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with Bagger Daves. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bagger Daves Burger has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Bagger Daves go up and down completely randomly.

Pair Corralation between Biglari Holdings and Bagger Daves

Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the Bagger Daves. But the stock apears to be less risky and, when comparing its historical volatility, Biglari Holdings is 1.79 times less risky than Bagger Daves. The stock trades about -0.33 of its potential returns per unit of risk. The Bagger Daves Burger is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5.51  in Bagger Daves Burger on October 23, 2024 and sell it today you would earn a total of  0.67  from holding Bagger Daves Burger or generate 12.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.0%
Values	Daily Returns

Biglari Holdings  vs.  Bagger Daves Burger

Biglari Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bagger Daves Burger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bagger Daves is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biglari Holdings and Bagger Daves

The main advantage of trading using opposite Biglari Holdings and Bagger Daves positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, Bagger Daves 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 Bagger Daves will offset losses from the drop in Bagger Daves' long position.

The idea behind Biglari Holdings and Bagger Daves Burger 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.