Correlation Between SNDL and Biglari Holdings

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

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

Diversification Opportunities for SNDL and Biglari Holdings

-0.74

Correlation Coefficient

SNDL  Biglari Holdings

Pay attention - limited upside

The 3 months correlation between SNDL and Biglari is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding SNDL Inc and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and SNDL 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 SNDL Inc 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 SNDL i.e., SNDL and Biglari Holdings go up and down completely randomly.

Pair Corralation between SNDL and Biglari Holdings

Given the investment horizon of 90 days SNDL is expected to generate 2.58 times less return on investment than Biglari Holdings. In addition to that, SNDL is 1.91 times more volatile than Biglari Holdings. It trades about 0.01 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.07 per unit of volatility. If you would invest  13,835  in Biglari Holdings on September 23, 2024 and sell it today you would earn a total of  11,233  from holding Biglari Holdings or generate 81.19% return on investment over 90 days.

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

SNDL Inc  vs.  Biglari Holdings

SNDL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SNDL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Biglari Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 18 (%) 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 SNDL and Biglari Holdings

The main advantage of trading using opposite SNDL and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SNDL 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 SNDL Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.