Correlation Between Malaga Financial and Biglari Holdings

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

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

Diversification Opportunities for Malaga Financial and Biglari Holdings

0.45

Correlation Coefficient

Malaga Financial  Biglari Holdings

Very weak diversification

The 3 months correlation between Malaga and Biglari is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Malaga Financial and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Malaga Financial 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 Malaga Financial 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 Malaga Financial i.e., Malaga Financial and Biglari Holdings go up and down completely randomly.

Pair Corralation between Malaga Financial and Biglari Holdings

Given the investment horizon of 90 days Malaga Financial is expected to generate 2.71 times more return on investment than Biglari Holdings. However, Malaga Financial is 2.71 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 0.06 per unit of risk. If you would invest  1,950  in Malaga Financial on October 4, 2024 and sell it today you would earn a total of  290.00  from holding Malaga Financial or generate 14.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	82.22%
Values	Daily Returns

Malaga Financial  vs.  Biglari Holdings

Malaga Financial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malaga Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Malaga Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Biglari Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 19 (%) 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 Malaga Financial and Biglari Holdings

The main advantage of trading using opposite Malaga Financial and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaga Financial 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 Malaga Financial 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.