Correlation Between Biglari Holdings and Carnival

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

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

Diversification Opportunities for Biglari Holdings and Carnival

0.57

Correlation Coefficient

Biglari Holdings  Carnival

Very weak diversification

The 3 months correlation between Biglari and Carnival is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Carnival in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival 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 Carnival. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Carnival go up and down completely randomly.

Pair Corralation between Biglari Holdings and Carnival

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.93 times more return on investment than Carnival. However, Biglari Holdings is 1.08 times less risky than Carnival. It trades about -0.09 of its potential returns per unit of risk. Carnival is currently generating about -0.12 per unit of risk. If you would invest  25,600  in Biglari Holdings on December 30, 2024 and sell it today you would lose (3,986) from holding Biglari Holdings or give up 15.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Biglari Holdings  vs.  Carnival

Biglari Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biglari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Carnival

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Biglari Holdings and Carnival

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

The idea behind Biglari Holdings and Carnival 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.