Correlation Between First Watch and Hilton Grand

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

Diversification Opportunities for First Watch and Hilton Grand

0.78

Correlation Coefficient

First Watch  Hilton Grand

Poor diversification

The 3 months correlation between First and Hilton is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Hilton Grand Vacations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Grand Vacations 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 Hilton Grand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Grand Vacations has no effect on the direction of First Watch i.e., First Watch and Hilton Grand go up and down completely randomly.

Pair Corralation between First Watch and Hilton Grand

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the Hilton Grand. In addition to that, First Watch is 1.32 times more volatile than Hilton Grand Vacations. It trades about -0.01 of its total potential returns per unit of risk. Hilton Grand Vacations is currently generating about -0.01 per unit of volatility. If you would invest  3,907  in Hilton Grand Vacations on December 28, 2024 and sell it today you would lose (120.00) from holding Hilton Grand Vacations or give up 3.07% of portfolio value over 90 days.

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

First Watch Restaurant  vs.  Hilton Grand Vacations

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.

Hilton Grand Vacations

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hilton Grand Vacations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Hilton Grand is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with First Watch and Hilton Grand

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

The idea behind First Watch Restaurant and Hilton Grand Vacations 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.