Correlation Between First Watch and 26442CAB0

Can any of the company-specific risk be diversified away by investing in both First Watch and 26442CAB0 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 26442CAB0 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 DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on First Watch and 26442CAB0 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 26442CAB0. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and 26442CAB0.

Diversification Opportunities for First Watch and 26442CAB0

-0.27

Correlation Coefficient

First Watch  26442CAB0

Very good diversification

The 3 months correlation between First and 26442CAB0 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS 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 26442CAB0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of First Watch i.e., First Watch and 26442CAB0 go up and down completely randomly.

Pair Corralation between First Watch and 26442CAB0

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the 26442CAB0. In addition to that, First Watch is 2.5 times more volatile than DUKE ENERGY CAROLINAS. It trades about -0.08 of its total potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about 0.02 per unit of volatility. If you would invest  10,420  in DUKE ENERGY CAROLINAS on December 24, 2024 and sell it today you would earn a total of  107.00  from holding DUKE ENERGY CAROLINAS or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.69%
Values	Daily Returns

First Watch Restaurant  vs.  DUKE ENERGY CAROLINAS

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DUKE ENERGY CAROLINAS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 26442CAB0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Watch and 26442CAB0

The main advantage of trading using opposite First Watch and 26442CAB0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, 26442CAB0 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 26442CAB0 will offset losses from the drop in 26442CAB0's long position.

The idea behind First Watch Restaurant and DUKE ENERGY CAROLINAS 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.