Correlation Between Guardian Pharmacy and Biglari Holdings

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

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

Diversification Opportunities for Guardian Pharmacy and Biglari Holdings

0.69

Correlation Coefficient

Guardian Pharmacy  Biglari Holdings

Poor diversification

The 3 months correlation between Guardian and Biglari is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Guardian Pharmacy Services, and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Guardian Pharmacy 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 Guardian Pharmacy Services, 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 Guardian Pharmacy i.e., Guardian Pharmacy and Biglari Holdings go up and down completely randomly.

Pair Corralation between Guardian Pharmacy and Biglari Holdings

Given the investment horizon of 90 days Guardian Pharmacy Services, is expected to under-perform the Biglari Holdings. In addition to that, Guardian Pharmacy is 1.25 times more volatile than Biglari Holdings. It trades about -0.23 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.22 per unit of volatility. If you would invest  22,631  in Biglari Holdings on October 8, 2024 and sell it today you would earn a total of  3,145  from holding Biglari Holdings or generate 13.9% return on investment over 90 days.

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

Guardian Pharmacy Services,  vs.  Biglari Holdings

Guardian Pharmacy

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guardian Pharmacy Services, are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Guardian Pharmacy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Biglari Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 21 (%) 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.

Pair Trading with Guardian Pharmacy and Biglari Holdings

The main advantage of trading using opposite Guardian Pharmacy and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guardian Pharmacy 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 Guardian Pharmacy Services, 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.