Correlation Between Vail Resorts and Biglari Holdings

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

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

Diversification Opportunities for Vail Resorts and Biglari Holdings

-0.45

Correlation Coefficient

Vail Resorts  Biglari Holdings

Very good diversification

The 3 months correlation between Vail and Biglari is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vail Resorts and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Vail Resorts 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 Vail Resorts 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 Vail Resorts i.e., Vail Resorts and Biglari Holdings go up and down completely randomly.

Pair Corralation between Vail Resorts and Biglari Holdings

Considering the 90-day investment horizon Vail Resorts is expected to generate 0.73 times more return on investment than Biglari Holdings. However, Vail Resorts is 1.36 times less risky than Biglari Holdings. It trades about -0.06 of its potential returns per unit of risk. Biglari Holdings is currently generating about -0.05 per unit of risk. If you would invest  19,791  in Vail Resorts on March 7, 2024 and sell it today you would lose (450.00) from holding Vail Resorts or give up 2.27% of portfolio value over 90 days.

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

Vail Resorts  vs.  Biglari Holdings

Vail Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vail Resorts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Biglari Holdings

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Vail Resorts and Biglari Holdings

The main advantage of trading using opposite Vail Resorts and Biglari Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vail Resorts 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 Vail Resorts 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.