Correlation Between Biglari Holdings and CONOCOPHILLIPS

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

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

Diversification Opportunities for Biglari Holdings and CONOCOPHILLIPS

-0.34

Correlation Coefficient

Biglari Holdings  CONOCOPHILLIPS

Very good diversification

The 3 months correlation between Biglari and CONOCOPHILLIPS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and CONOCOPHILLIPS CDA FDG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONOCOPHILLIPS CDA FDG 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 CONOCOPHILLIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONOCOPHILLIPS CDA FDG has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and CONOCOPHILLIPS go up and down completely randomly.

Pair Corralation between Biglari Holdings and CONOCOPHILLIPS

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 1.93 times more return on investment than CONOCOPHILLIPS. However, Biglari Holdings is 1.93 times more volatile than CONOCOPHILLIPS CDA FDG. It trades about 0.07 of its potential returns per unit of risk. CONOCOPHILLIPS CDA FDG is currently generating about -0.01 per unit of risk. If you would invest  17,084  in Biglari Holdings on September 14, 2024 and sell it today you would earn a total of  6,526  from holding Biglari Holdings or generate 38.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.99%
Values	Daily Returns

Biglari Holdings  vs.  CONOCOPHILLIPS CDA FDG

Biglari Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

CONOCOPHILLIPS CDA FDG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONOCOPHILLIPS CDA FDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONOCOPHILLIPS CDA FDG investors.

Pair Trading with Biglari Holdings and CONOCOPHILLIPS

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

The idea behind Biglari Holdings and CONOCOPHILLIPS CDA FDG 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.