Correlation Between LuxUrban Hotels and Biglari Holdings

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

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Biglari Holdings, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Biglari Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Biglari Holdings.

Diversification Opportunities for LuxUrban Hotels and Biglari Holdings

-0.16

Correlation Coefficient

LuxUrban Hotels  Biglari Holdings

Good diversification

The 3 months correlation between LuxUrban and Biglari is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and LuxUrban Hotels 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 LuxUrban Hotels 1300 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 LuxUrban Hotels i.e., LuxUrban Hotels and Biglari Holdings go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Biglari Holdings

Assuming the 90 days horizon LuxUrban Hotels 1300 is expected to under-perform the Biglari Holdings. In addition to that, LuxUrban Hotels is 1.42 times more volatile than Biglari Holdings. It trades about -0.02 of its total potential returns per unit of risk. Biglari Holdings is currently generating about 0.17 per unit of volatility. If you would invest  15,133  in Biglari Holdings on February 18, 2024 and sell it today you would earn a total of  4,867  from holding Biglari Holdings or generate 32.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

LuxUrban Hotels 1300  vs.  Biglari Holdings

LuxUrban Hotels 1300

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LuxUrban Hotels 1300 has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, LuxUrban Hotels is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Biglari Holdings

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Biglari Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical indicators, Biglari Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LuxUrban Hotels and Biglari Holdings

The main advantage of trading using opposite LuxUrban Hotels and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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 LuxUrban Hotels 1300 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.