Correlation Between First Watch and POWR Lithium

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both First Watch and POWR Lithium 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 POWR Lithium 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 POWR Lithium Corp, you can compare the effects of market volatilities on First Watch and POWR Lithium 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 POWR Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and POWR Lithium.

Diversification Opportunities for First Watch and POWR Lithium

-0.02
  Correlation Coefficient

Good diversification

The 3 months correlation between First and POWR is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and POWR Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWR Lithium 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 POWR Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWR Lithium Corp has no effect on the direction of First Watch i.e., First Watch and POWR Lithium go up and down completely randomly.

Pair Corralation between First Watch and POWR Lithium

Given the investment horizon of 90 days First Watch Restaurant is expected to generate 0.24 times more return on investment than POWR Lithium. However, First Watch Restaurant is 4.13 times less risky than POWR Lithium. It trades about 0.09 of its potential returns per unit of risk. POWR Lithium Corp is currently generating about -0.01 per unit of risk. If you would invest  1,897  in First Watch Restaurant on October 10, 2024 and sell it today you would earn a total of  74.00  from holding First Watch Restaurant or generate 3.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

First Watch Restaurant  vs.  POWR Lithium Corp

 Performance 
       Timeline  
First Watch Restaurant 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Good
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.
POWR Lithium Corp 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in POWR Lithium Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, POWR Lithium reported solid returns over the last few months and may actually be approaching a breakup point.

First Watch and POWR Lithium Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with First Watch and POWR Lithium

The main advantage of trading using opposite First Watch and POWR Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, POWR Lithium 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 POWR Lithium will offset losses from the drop in POWR Lithium's long position.
The idea behind First Watch Restaurant and POWR Lithium 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.
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 the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

Other Complementary Tools

Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets