Correlation Between HelloFresh and Biglari Holdings

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

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

Diversification Opportunities for HelloFresh and Biglari Holdings

0.63

Correlation Coefficient

HelloFresh  Biglari Holdings

Poor diversification

The 3 months correlation between HelloFresh and Biglari is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HelloFresh SE and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and HelloFresh 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 HelloFresh SE 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 HelloFresh i.e., HelloFresh and Biglari Holdings go up and down completely randomly.

Pair Corralation between HelloFresh and Biglari Holdings

Assuming the 90 days horizon HelloFresh SE is expected to under-perform the Biglari Holdings. In addition to that, HelloFresh is 1.72 times more volatile than Biglari Holdings. It trades about -0.1 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.19 per unit of volatility. If you would invest  23,000  in Biglari Holdings on October 6, 2024 and sell it today you would earn a total of  2,776  from holding Biglari Holdings or generate 12.07% return on investment over 90 days.

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

HelloFresh SE  vs.  Biglari Holdings

HelloFresh SE

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HelloFresh SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, HelloFresh reported solid returns over the last few months and may actually be approaching a breakup point.

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 HelloFresh and Biglari Holdings

The main advantage of trading using opposite HelloFresh and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HelloFresh 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 HelloFresh SE 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.