Correlation Between Potbelly and Biglari Holdings
Can any of the company-specific risk be diversified away by investing in both Potbelly 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 Potbelly and Biglari Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Potbelly Co and Biglari Holdings, you can compare the effects of market volatilities on Potbelly 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 Potbelly with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Potbelly and Biglari Holdings.
Diversification Opportunities for Potbelly and Biglari Holdings
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Potbelly and Biglari is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Potbelly Co and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Potbelly 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 Potbelly Co 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 Potbelly i.e., Potbelly and Biglari Holdings go up and down completely randomly.
Pair Corralation between Potbelly and Biglari Holdings
Given the investment horizon of 90 days Potbelly Co is expected to under-perform the Biglari Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Potbelly Co is 1.11 times less risky than Biglari Holdings. The stock trades about -0.4 of its potential returns per unit of risk. The Biglari Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 19,940 in Biglari Holdings on January 20, 2024 and sell it today you would lose (283.00) from holding Biglari Holdings or give up 1.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Potbelly Co vs. Biglari Holdings
Performance |
| Timeline |
| Potbelly |
| Biglari Holdings |
Potbelly and Biglari Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Potbelly and Biglari Holdings
The main advantage of trading using opposite Potbelly and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Potbelly 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.| Potbelly vs. Chuys Holdings | Potbelly vs. FAT Brands | Potbelly vs. BJs Restaurants | Potbelly vs. One Group Hospitality |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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