Correlation Between First Watch and Codere Online

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

By analyzing existing cross correlation between First Watch Restaurant and Codere Online Corp, you can compare the effects of market volatilities on First Watch and Codere Online 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 First Watch with a short position of Codere Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Codere Online.

Diversification Opportunities for First Watch and Codere Online

0.16

Correlation Coefficient

First Watch  Codere Online

Average diversification

The 3 months correlation between First and Codere is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Codere Online Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Codere Online Corp and First Watch 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 First Watch Restaurant are associated (or correlated) with Codere Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Codere Online Corp has no effect on the direction of First Watch i.e., First Watch and Codere Online go up and down completely randomly.

Pair Corralation between First Watch and Codere Online

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the Codere Online. In addition to that, First Watch is 1.04 times more volatile than Codere Online Corp. It trades about -0.01 of its total potential returns per unit of risk. Codere Online Corp is currently generating about 0.1 per unit of volatility. If you would invest  629.00  in Codere Online Corp on December 28, 2024 and sell it today you would earn a total of  101.00  from holding Codere Online Corp or generate 16.06% return on investment over 90 days.

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

First Watch Restaurant  vs.  Codere Online Corp

First Watch Restaurant

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Watch Restaurant has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First Watch is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Codere Online Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Codere Online Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Codere Online displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Watch and Codere Online

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

The idea behind First Watch Restaurant and Codere Online Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.