Correlation Between AMCON Distributing and Biglari Holdings

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

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

Diversification Opportunities for AMCON Distributing and Biglari Holdings

0.4

Correlation Coefficient

AMCON Distributing  Biglari Holdings

Very weak diversification

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

Pair Corralation between AMCON Distributing and Biglari Holdings

Considering the 90-day investment horizon AMCON Distributing is expected to generate 1.75 times more return on investment than Biglari Holdings. However, AMCON Distributing is 1.75 times more volatile than Biglari Holdings. It trades about -0.03 of its potential returns per unit of risk. Biglari Holdings is currently generating about -0.12 per unit of risk. If you would invest  13,456  in AMCON Distributing on December 27, 2024 and sell it today you would lose (1,728) from holding AMCON Distributing or give up 12.84% of portfolio value over 90 days.

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

AMCON Distributing  vs.  Biglari Holdings

AMCON Distributing

Risk-Adjusted Performance

Very Weak

Over the last 90 days AMCON Distributing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.

Pair Trading with AMCON Distributing and Biglari Holdings

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

The idea behind AMCON Distributing and Biglari 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.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.