Correlation Between Biglari Holdings and Edgewell Personal

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

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

Diversification Opportunities for Biglari Holdings and Edgewell Personal

0.11

Correlation Coefficient

Biglari Holdings  Edgewell Personal

Average diversification

The 3 months correlation between Biglari and Edgewell is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Edgewell Personal Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewell Personal Care 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 Edgewell Personal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewell Personal Care has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Edgewell Personal go up and down completely randomly.

Pair Corralation between Biglari Holdings and Edgewell Personal

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.42 times more return on investment than Edgewell Personal. However, Biglari Holdings is 1.42 times more volatile than Edgewell Personal Care. It trades about 0.07 of its potential returns per unit of risk. Edgewell Personal Care is currently generating about -0.01 per unit of risk. If you would invest  14,333  in Biglari Holdings on September 27, 2024 and sell it today you would earn a total of  12,122  from holding Biglari Holdings or generate 84.57% return on investment over 90 days.

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

Biglari Holdings  vs.  Edgewell Personal Care

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.

Edgewell Personal Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Edgewell Personal Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Edgewell Personal is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Biglari Holdings and Edgewell Personal

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

The idea behind Biglari Holdings and Edgewell Personal Care 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.