Correlation Between Biglari Holdings and Superior Industries

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

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

Diversification Opportunities for Biglari Holdings and Superior Industries

-0.6

Correlation Coefficient

Biglari Holdings  Superior Industries

Excellent diversification

The 3 months correlation between Biglari and Superior is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Superior Industries Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Industries 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 Superior Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Industries has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Superior Industries go up and down completely randomly.

Pair Corralation between Biglari Holdings and Superior Industries

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.75 times more return on investment than Superior Industries. However, Biglari Holdings is 1.33 times less risky than Superior Industries. It trades about 0.11 of its potential returns per unit of risk. Superior Industries International is currently generating about -0.11 per unit of risk. If you would invest  21,043  in Biglari Holdings on November 28, 2024 and sell it today you would earn a total of  3,502  from holding Biglari Holdings or generate 16.64% return on investment over 90 days.

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

Biglari Holdings  vs.  Superior Industries Internatio

Biglari Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 8 (%) 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.

Superior Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Superior Industries International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Biglari Holdings and Superior Industries

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

The idea behind Biglari Holdings and Superior Industries International 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.