Correlation Between Biglari Holdings and Guardian Pharmacy

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

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

Diversification Opportunities for Biglari Holdings and Guardian Pharmacy

0.03

Correlation Coefficient

Biglari Holdings  Guardian Pharmacy

Significant diversification

The 3 months correlation between Biglari and Guardian is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Guardian Pharmacy Services, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian Pharmacy 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 Guardian Pharmacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian Pharmacy has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Guardian Pharmacy go up and down completely randomly.

Pair Corralation between Biglari Holdings and Guardian Pharmacy

Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the Guardian Pharmacy. But the stock apears to be less risky and, when comparing its historical volatility, Biglari Holdings is 1.35 times less risky than Guardian Pharmacy. The stock trades about -0.07 of its potential returns per unit of risk. The Guardian Pharmacy Services, is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,365  in Guardian Pharmacy Services, on December 21, 2024 and sell it today you would lose (236.00) from holding Guardian Pharmacy Services, or give up 9.98% of portfolio value over 90 days.

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

Biglari Holdings  vs.  Guardian Pharmacy Services,

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 latest inconsistent performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Guardian Pharmacy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian Pharmacy Services, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Biglari Holdings and Guardian Pharmacy

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

The idea behind Biglari Holdings and Guardian Pharmacy Services, 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.