Correlation Between Sligro Food and Biglari Holdings

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

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

Diversification Opportunities for Sligro Food and Biglari Holdings

-0.9

Correlation Coefficient

Sligro Food  Biglari Holdings

Pay attention - limited upside

The 3 months correlation between Sligro and Biglari is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Sligro Food Group and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Sligro Food 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 Sligro Food Group 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 Sligro Food i.e., Sligro Food and Biglari Holdings go up and down completely randomly.

Pair Corralation between Sligro Food and Biglari Holdings

Assuming the 90 days horizon Sligro Food Group is expected to under-perform the Biglari Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sligro Food Group is 1.53 times less risky than Biglari Holdings. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Biglari Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,094  in Biglari Holdings on October 3, 2024 and sell it today you would earn a total of  10,506  from holding Biglari Holdings or generate 69.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.26%
Values	Daily Returns

Sligro Food Group  vs.  Biglari Holdings

Sligro Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sligro Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 fragile technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sligro Food and Biglari Holdings

The main advantage of trading using opposite Sligro Food and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sligro Food 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 Sligro Food Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.