Correlation Between Woodward and Biglari Holdings

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

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

Diversification Opportunities for Woodward and Biglari Holdings

0.94

Correlation Coefficient

Woodward  Biglari Holdings

Almost no diversification

The 3 months correlation between Woodward and Biglari is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Woodward and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Woodward 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 Woodward 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 Woodward i.e., Woodward and Biglari Holdings go up and down completely randomly.

Pair Corralation between Woodward and Biglari Holdings

Considering the 90-day investment horizon Woodward is expected to generate 0.75 times more return on investment than Biglari Holdings. However, Woodward is 1.34 times less risky than Biglari Holdings. It trades about 0.33 of its potential returns per unit of risk. Biglari Holdings is currently generating about 0.19 per unit of risk. If you would invest  19,395  in Woodward on May 7, 2025 and sell it today you would earn a total of  6,592  from holding Woodward or generate 33.99% return on investment over 90 days.

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

Woodward  vs.  Biglari Holdings

Woodward

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Woodward are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Woodward exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 fairly weak technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Woodward and Biglari Holdings

The main advantage of trading using opposite Woodward and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodward 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 Woodward 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.