Correlation Between Biglari Holdings and OneSpaWorld Holdings

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

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

Diversification Opportunities for Biglari Holdings and OneSpaWorld Holdings

0.88

Correlation Coefficient

Biglari Holdings  OneSpaWorld Holdings

Very poor diversification

The 3 months correlation between Biglari and OneSpaWorld is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and OneSpaWorld Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSpaWorld Holdings 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 OneSpaWorld Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSpaWorld Holdings has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and OneSpaWorld Holdings go up and down completely randomly.

Pair Corralation between Biglari Holdings and OneSpaWorld Holdings

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.3 times less return on investment than OneSpaWorld Holdings. In addition to that, Biglari Holdings is 1.07 times more volatile than OneSpaWorld Holdings. It trades about 0.06 of its total potential returns per unit of risk. OneSpaWorld Holdings is currently generating about 0.08 per unit of volatility. If you would invest  929.00  in OneSpaWorld Holdings on September 20, 2024 and sell it today you would earn a total of  1,028  from holding OneSpaWorld Holdings or generate 110.66% return on investment over 90 days.

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

Biglari Holdings  vs.  OneSpaWorld Holdings

Biglari Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 15 (%) 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.

OneSpaWorld Holdings

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Biglari Holdings and OneSpaWorld Holdings

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

The idea behind Biglari Holdings and OneSpaWorld 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.

Check out your portfolio center.

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.