Correlation Between Biglari Holdings and Nathans Famous

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

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

Diversification Opportunities for Biglari Holdings and Nathans Famous

0.02

Correlation Coefficient

Biglari Holdings  Nathans Famous

Significant diversification

The 3 months correlation between Biglari and Nathans is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Nathans Famous in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nathans Famous 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 Nathans Famous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nathans Famous has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Nathans Famous go up and down completely randomly.

Pair Corralation between Biglari Holdings and Nathans Famous

Given the investment horizon of 90 days Biglari Holdings is expected to generate 0.8 times more return on investment than Nathans Famous. However, Biglari Holdings is 1.26 times less risky than Nathans Famous. It trades about 0.18 of its potential returns per unit of risk. Nathans Famous is currently generating about 0.03 per unit of risk. If you would invest  118,250  in Biglari Holdings on May 7, 2025 and sell it today you would earn a total of  26,010  from holding Biglari Holdings or generate 22.0% 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.  Nathans Famous

Biglari Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Biglari Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Nathans Famous

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nathans Famous are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Nathans Famous is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Biglari Holdings and Nathans Famous

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

The idea behind Biglari Holdings and Nathans Famous 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.