Correlation Between Biglari Holdings and Sweetgreen

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

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

Diversification Opportunities for Biglari Holdings and Sweetgreen

0.07

Correlation Coefficient

Biglari Holdings  Sweetgreen

Significant diversification

The 3 months correlation between Biglari and Sweetgreen is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and Sweetgreen go up and down completely randomly.

Pair Corralation between Biglari Holdings and Sweetgreen

Allowing for the 90-day total investment horizon Biglari Holdings is expected to generate 0.59 times more return on investment than Sweetgreen. However, Biglari Holdings is 1.7 times less risky than Sweetgreen. It trades about 0.14 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.02 per unit of risk. If you would invest  17,526  in Biglari Holdings on August 20, 2024 and sell it today you would earn a total of  3,474  from holding Biglari Holdings or generate 19.82% 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.  Sweetgreen

Biglari Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sweetgreen

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sweetgreen are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Sweetgreen is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Biglari Holdings and Sweetgreen

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

The idea behind Biglari Holdings and Sweetgreen 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..