Correlation Between Dave and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Dave 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 Dave and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Inc and Biglari Holdings, you can compare the effects of market volatilities on Dave 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 Dave with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave and Biglari Holdings.
Diversification Opportunities for Dave and Biglari Holdings
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dave and Biglari is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dave Inc and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Dave 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 Dave 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 Dave i.e., Dave and Biglari Holdings go up and down completely randomly.
Pair Corralation between Dave and Biglari Holdings
Given the investment horizon of 90 days Dave Inc is expected to generate 3.26 times more return on investment than Biglari Holdings. However, Dave is 3.26 times more volatile than Biglari Holdings. It trades about 0.05 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.06 per unit of risk. If you would invest 2,304 in Dave Inc on January 26, 2024 and sell it today you would earn a total of 1,987 from holding Dave Inc or generate 86.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Inc vs. Biglari Holdings
Performance |
| Timeline |
| Dave Inc |
| Biglari Holdings |
Dave and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave and Biglari Holdings
The main advantage of trading using opposite Dave and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave 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 Dave 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.| Biglari Holdings vs. Cannae Holdings | Biglari Holdings vs. BJs Restaurants | Biglari Holdings vs. Ark Restaurants Corp | Biglari Holdings vs. Noble Romans |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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