Correlation Between Cracker Barrel and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Cracker Barrel 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 Cracker Barrel and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cracker Barrel Old and Biglari Holdings, you can compare the effects of market volatilities on Cracker Barrel 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 Cracker Barrel with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cracker Barrel and Biglari Holdings.
Diversification Opportunities for Cracker Barrel and Biglari Holdings
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cracker and Biglari is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cracker Barrel Old and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Cracker Barrel 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 Cracker Barrel Old 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 Cracker Barrel i.e., Cracker Barrel and Biglari Holdings go up and down completely randomly.
Pair Corralation between Cracker Barrel and Biglari Holdings
Given the investment horizon of 90 days Cracker Barrel Old is expected to under-perform the Biglari Holdings. In addition to that, Cracker Barrel is 1.05 times more volatile than Biglari Holdings. It trades about -0.13 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.16 per unit of volatility. If you would invest 15,140 in Biglari Holdings on January 19, 2024 and sell it today you would earn a total of 4,076 from holding Biglari Holdings or generate 26.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cracker Barrel Old vs. Biglari Holdings
Performance |
| Timeline |
| Cracker Barrel Old |
| Biglari Holdings |
Cracker Barrel and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cracker Barrel and Biglari Holdings
The main advantage of trading using opposite Cracker Barrel and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cracker Barrel 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 Cracker Barrel Old 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Stocks Directory Find actively traded stocks across global markets |