Correlation Between Virtus Dfa and Biglari Holdings

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

By analyzing existing cross correlation between Virtus Dfa 2040 and Biglari Holdings, you can compare the effects of market volatilities on Virtus Dfa 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 Virtus Dfa with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Biglari Holdings.

Diversification Opportunities for Virtus Dfa and Biglari Holdings

-0.45

Correlation Coefficient

Virtus Dfa  Biglari Holdings

Very good diversification

The 3 months correlation between Virtus and Biglari is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Virtus Dfa 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 Virtus Dfa 2040 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 Virtus Dfa i.e., Virtus Dfa and Biglari Holdings go up and down completely randomly.

Pair Corralation between Virtus Dfa and Biglari Holdings

Assuming the 90 days horizon Virtus Dfa is expected to generate 3.37 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, Virtus Dfa 2040 is 2.63 times less risky than Biglari Holdings. It trades about 0.05 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  14,784  in Biglari Holdings on October 4, 2024 and sell it today you would earn a total of  10,212  from holding Biglari Holdings or generate 69.07% return on investment over 90 days.

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

Virtus Dfa 2040  vs.  Biglari Holdings

Virtus Dfa 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dfa 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

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 Virtus Dfa and Biglari Holdings

The main advantage of trading using opposite Virtus Dfa and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dfa 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 Virtus Dfa 2040 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.