Correlation Between Biglari Holdings and Kenvue

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

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

Diversification Opportunities for Biglari Holdings and Kenvue

-0.2

Correlation Coefficient

Biglari Holdings  Kenvue

Good diversification

The 3 months correlation between Biglari and Kenvue is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Kenvue Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenvue Inc 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 Kenvue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenvue Inc has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Kenvue go up and down completely randomly.

Pair Corralation between Biglari Holdings and Kenvue

Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the Kenvue. In addition to that, Biglari Holdings is 1.64 times more volatile than Kenvue Inc. It trades about -0.06 of its total potential returns per unit of risk. Kenvue Inc is currently generating about 0.11 per unit of volatility. If you would invest  2,140  in Kenvue Inc on December 19, 2024 and sell it today you would earn a total of  194.00  from holding Kenvue Inc or generate 9.07% return on investment over 90 days.

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

Biglari Holdings  vs.  Kenvue Inc

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 unsteady 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.

Kenvue Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kenvue Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Kenvue may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Biglari Holdings and Kenvue

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

The idea behind Biglari Holdings and Kenvue Inc 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.