Correlation Between Biglari Holdings and L3Harris Technologies

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Can any of the company-specific risk be diversified away by investing in both Biglari Holdings and L3Harris Technologies 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 L3Harris Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biglari Holdings and L3Harris Technologies, you can compare the effects of market volatilities on Biglari Holdings and L3Harris Technologies 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 L3Harris Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biglari Holdings and L3Harris Technologies.

Diversification Opportunities for Biglari Holdings and L3Harris Technologies

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Biglari and L3Harris is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Biglari Holdings and L3Harris Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L3Harris Technologies 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 L3Harris Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L3Harris Technologies has no effect on the direction of Biglari Holdings i.e., Biglari Holdings and L3Harris Technologies go up and down completely randomly.

Pair Corralation between Biglari Holdings and L3Harris Technologies

Allowing for the 90-day total investment horizon Biglari Holdings is expected to under-perform the L3Harris Technologies. In addition to that, Biglari Holdings is 1.45 times more volatile than L3Harris Technologies. It trades about -0.15 of its total potential returns per unit of risk. L3Harris Technologies is currently generating about -0.04 per unit of volatility. If you would invest  23,978  in L3Harris Technologies on March 31, 2022 and sell it today you would lose (415.00)  from holding L3Harris Technologies or give up 1.73% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Biglari Holdings  vs.  L3Harris Technologies

 Performance (%) 
      Timeline 
Biglari Holdings 
Biglari Performance
0 of 100
Over the last 90 days Biglari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Structure and Payout Changes

Last Split Factor
3:2
Ex Dividend Date
1996-06-14
Last Split Date
2018-05-01

Biglari Price Channel

L3Harris Technologies 
L3Harris Performance
0 of 100
Over the last 90 days L3Harris Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, L3Harris Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0196
Payout Ratio
0.33
Last Split Factor
10000:9448
Forward Annual Dividend Rate
4.48
Dividend Date
2022-06-17
Ex Dividend Date
2022-06-02
Last Split Date
2009-05-11

L3Harris Price Channel

Biglari Holdings and L3Harris Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Biglari Holdings and L3Harris Technologies

The main advantage of trading using opposite Biglari Holdings and L3Harris Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biglari Holdings position performs unexpectedly, L3Harris Technologies 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 L3Harris Technologies will offset losses from the drop in L3Harris Technologies' long position.
The idea behind Biglari Holdings and L3Harris Technologies 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.
Check out your portfolio center. 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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