Correlation Between First Watch and Getty Images

Can any of the company-specific risk be diversified away by investing in both First Watch and Getty Images 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 Getty Images 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 Getty Images Holdings, you can compare the effects of market volatilities on First Watch and Getty Images 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 Getty Images. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Getty Images.

Diversification Opportunities for First Watch and Getty Images

0.36

Correlation Coefficient

First Watch  Getty Images

Weak diversification

The 3 months correlation between First and Getty is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Getty Images Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Images Holdings 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 Getty Images. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Images Holdings has no effect on the direction of First Watch i.e., First Watch and Getty Images go up and down completely randomly.

Pair Corralation between First Watch and Getty Images

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the Getty Images. But the stock apears to be less risky and, when comparing its historical volatility, First Watch Restaurant is 1.81 times less risky than Getty Images. The stock trades about -0.05 of its potential returns per unit of risk. The Getty Images Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  228.00  in Getty Images Holdings on December 20, 2024 and sell it today you would lose (3.00) from holding Getty Images Holdings or give up 1.32% of portfolio value over 90 days.

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

First Watch Restaurant  vs.  Getty Images Holdings

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 latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Getty Images Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Getty Images Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Getty Images may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with First Watch and Getty Images

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

The idea behind First Watch Restaurant and Getty Images 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.