Correlation Between First Watch and Solidion Technology

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

Diversification Opportunities for First Watch and Solidion Technology

0.29

Correlation Coefficient

First Watch  Solidion Technology

Modest diversification

The 3 months correlation between First and Solidion is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Solidion Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solidion Technology 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 Solidion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solidion Technology has no effect on the direction of First Watch i.e., First Watch and Solidion Technology go up and down completely randomly.

Pair Corralation between First Watch and Solidion Technology

Given the investment horizon of 90 days First Watch Restaurant is expected to generate 0.22 times more return on investment than Solidion Technology. However, First Watch Restaurant is 4.59 times less risky than Solidion Technology. It trades about -0.04 of its potential returns per unit of risk. Solidion Technology is currently generating about -0.05 per unit of risk. If you would invest  1,861  in First Watch Restaurant on December 20, 2024 and sell it today you would lose (176.00) from holding First Watch Restaurant or give up 9.46% 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.  Solidion Technology

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.

Solidion Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solidion Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with First Watch and Solidion Technology

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

The idea behind First Watch Restaurant and Solidion Technology 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.