Correlation Between Biglari Holdings and WW International

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

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

Diversification Opportunities for Biglari Holdings and WW International

-0.93

Correlation Coefficient

Biglari Holdings  WW International

Pay attention - limited upside

The 3 months correlation between Biglari and WW International is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and WW International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WW International and Biglari Holdings 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 Biglari Holdings are associated (or correlated) with WW International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WW International has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and WW International go up and down completely randomly.

Pair Corralation between Biglari Holdings and WW International

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.35 times more return on investment than WW International. However, Biglari Holdings is 2.83 times less risky than WW International. It trades about 0.0 of its potential returns per unit of risk. WW International is currently generating about -0.03 per unit of risk. If you would invest  20,078  in Biglari Holdings on January 25, 2024 and sell it today you would lose (59.00) from holding Biglari Holdings or give up 0.29% of portfolio value over 90 days.

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

Biglari Holdings  vs.  WW International

Biglari Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 12 (%) 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.

WW International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WW International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Biglari Holdings and WW International

The main advantage of trading using opposite Biglari Holdings and WW International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, WW International 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 WW International will offset losses from the drop in WW International's long position.

The idea behind Biglari Holdings and WW International 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.