Correlation Between Biglari Holdings and Foundry Partners

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

By analyzing existing cross correlation between Biglari Holdings and Foundry Partners Fundamental, you can compare the effects of market volatilities on Biglari Holdings and Foundry Partners 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 Foundry Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and Foundry Partners.

Diversification Opportunities for Biglari Holdings and Foundry Partners

0.17

Correlation Coefficient

Biglari Holdings  Foundry Partners

Average diversification

The 3 months correlation between Biglari and Foundry is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Foundry Partners Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foundry Partners Fun 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 Foundry Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foundry Partners Fun has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Foundry Partners go up and down completely randomly.

Pair Corralation between Biglari Holdings and Foundry Partners

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 2.17 times more return on investment than Foundry Partners. However, Biglari Holdings is 2.17 times more volatile than Foundry Partners Fundamental. It trades about 0.28 of its potential returns per unit of risk. Foundry Partners Fundamental is currently generating about -0.03 per unit of risk. If you would invest  16,972  in Biglari Holdings on September 27, 2024 and sell it today you would earn a total of  9,483  from holding Biglari Holdings or generate 55.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Biglari Holdings  vs.  Foundry Partners Fundamental

Biglari Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 21 (%) 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.

Foundry Partners Fun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foundry Partners Fundamental has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Foundry Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Biglari Holdings and Foundry Partners

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

The idea behind Biglari Holdings and Foundry Partners Fundamental 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..