Correlation Between First Watch and Monogram Orthopaedics

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

Diversification Opportunities for First Watch and Monogram Orthopaedics

0.01

Correlation Coefficient

First Watch  Monogram Orthopaedics

Significant diversification

The 3 months correlation between First and Monogram is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Monogram Orthopaedics Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monogram Orthopaedics 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 Monogram Orthopaedics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monogram Orthopaedics has no effect on the direction of First Watch i.e., First Watch and Monogram Orthopaedics go up and down completely randomly.

Pair Corralation between First Watch and Monogram Orthopaedics

Given the investment horizon of 90 days First Watch Restaurant is expected to generate 0.53 times more return on investment than Monogram Orthopaedics. However, First Watch Restaurant is 1.89 times less risky than Monogram Orthopaedics. It trades about 0.11 of its potential returns per unit of risk. Monogram Orthopaedics Common is currently generating about -0.01 per unit of risk. If you would invest  1,897  in First Watch Restaurant on October 8, 2024 and sell it today you would earn a total of  85.00  from holding First Watch Restaurant or generate 4.48% 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.  Monogram Orthopaedics Common

First Watch Restaurant

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Watch Restaurant are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, First Watch reported solid returns over the last few months and may actually be approaching a breakup point.

Monogram Orthopaedics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monogram Orthopaedics Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Monogram Orthopaedics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with First Watch and Monogram Orthopaedics

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

The idea behind First Watch Restaurant and Monogram Orthopaedics Common 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.