Correlation Between ConnectOne Bancorp and Biglari Holdings

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

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

Diversification Opportunities for ConnectOne Bancorp and Biglari Holdings

0.35

Correlation Coefficient

ConnectOne Bancorp  Biglari Holdings

Weak diversification

The 3 months correlation between ConnectOne and Biglari is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding ConnectOne Bancorp and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and ConnectOne Bancorp 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 ConnectOne Bancorp are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of ConnectOne Bancorp i.e., ConnectOne Bancorp and Biglari Holdings go up and down completely randomly.

Pair Corralation between ConnectOne Bancorp and Biglari Holdings

Given the investment horizon of 90 days ConnectOne Bancorp is expected to under-perform the Biglari Holdings. But the stock apears to be less risky and, when comparing its historical volatility, ConnectOne Bancorp is 1.07 times less risky than Biglari Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The Biglari Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

ConnectOne Bancorp  vs.  Biglari Holdings

ConnectOne Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days ConnectOne Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ConnectOne Bancorp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with ConnectOne Bancorp and Biglari Holdings

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

The idea behind ConnectOne Bancorp and Biglari Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.