Correlation Between Biglari Holdings and Templeton Dragon

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

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

Diversification Opportunities for Biglari Holdings and Templeton Dragon

-0.4

Correlation Coefficient

Biglari Holdings  Templeton Dragon

Very good diversification

The 3 months correlation between Biglari and Templeton is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Templeton Dragon Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Dragon Closed 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 Templeton Dragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Dragon Closed has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Templeton Dragon go up and down completely randomly.

Pair Corralation between Biglari Holdings and Templeton Dragon

Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the Templeton Dragon. In addition to that, Biglari Holdings is 1.72 times more volatile than Templeton Dragon Closed. It trades about -0.12 of its total potential returns per unit of risk. Templeton Dragon Closed is currently generating about 0.2 per unit of volatility. If you would invest  841.00  in Templeton Dragon Closed on December 28, 2024 and sell it today you would earn a total of  150.00  from holding Templeton Dragon Closed or generate 17.84% return on investment over 90 days.

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

Biglari Holdings  vs.  Templeton Dragon Closed

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.

Templeton Dragon Closed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Dragon Closed are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly inconsistent fundamental indicators, Templeton Dragon reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biglari Holdings and Templeton Dragon

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

The idea behind Biglari Holdings and Templeton Dragon Closed 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.