Correlation Between Biglari Holdings and Sportsmans

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

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

Diversification Opportunities for Biglari Holdings and Sportsmans

0.62

Correlation Coefficient

Biglari Holdings  Sportsmans

Poor diversification

The 3 months correlation between Biglari and Sportsmans is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Sportsmans go up and down completely randomly.

Pair Corralation between Biglari Holdings and Sportsmans

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.62 times more return on investment than Sportsmans. However, Biglari Holdings is 1.62 times less risky than Sportsmans. It trades about -0.09 of its potential returns per unit of risk. Sportsmans is currently generating about -0.35 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	Significant
Accuracy	100.0%
Values	Daily Returns

Biglari Holdings  vs.  Sportsmans

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.

Sportsmans

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportsmans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic 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.

Pair Trading with Biglari Holdings and Sportsmans

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

The idea behind Biglari Holdings and Sportsmans 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.