Correlation Between The Hartford and Biglari Holdings

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

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

Diversification Opportunities for The Hartford and Biglari Holdings

0.37

Correlation Coefficient

The Hartford  Biglari Holdings

Weak diversification

The 3 months correlation between The and Biglari is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Balanced and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and The Hartford 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 The Hartford Balanced 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 The Hartford i.e., The Hartford and Biglari Holdings go up and down completely randomly.

Pair Corralation between The Hartford and Biglari Holdings

Assuming the 90 days horizon The Hartford is expected to generate 5.6 times less return on investment than Biglari Holdings. But when comparing it to its historical volatility, The Hartford Balanced is 3.61 times less risky than Biglari Holdings. It trades about 0.04 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  12,200  in Biglari Holdings on March 2, 2024 and sell it today you would earn a total of  7,450  from holding Biglari Holdings or generate 61.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

The Hartford Balanced  vs.  Biglari Holdings

Hartford Balanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Balanced are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Biglari Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Biglari Holdings may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with The Hartford and Biglari Holdings

The main advantage of trading using opposite The Hartford and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford 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 The Hartford Balanced 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.