Correlation Between First Watch and 35137LAJ4

Can any of the company-specific risk be diversified away by investing in both First Watch and 35137LAJ4 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 35137LAJ4 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 FOX P, you can compare the effects of market volatilities on First Watch and 35137LAJ4 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 35137LAJ4. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and 35137LAJ4.

Diversification Opportunities for First Watch and 35137LAJ4

-0.29

Correlation Coefficient

First Watch  35137LAJ4

Very good diversification

The 3 months correlation between First and 35137LAJ4 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and FOX P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 35137LAJ4 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 35137LAJ4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 35137LAJ4 has no effect on the direction of First Watch i.e., First Watch and 35137LAJ4 go up and down completely randomly.

Pair Corralation between First Watch and 35137LAJ4

Given the investment horizon of 90 days First Watch Restaurant is expected to generate 3.64 times more return on investment than 35137LAJ4. However, First Watch is 3.64 times more volatile than FOX P. It trades about -0.04 of its potential returns per unit of risk. FOX P is currently generating about -0.46 per unit of risk. If you would invest  1,909  in First Watch Restaurant on September 29, 2024 and sell it today you would lose (39.00) from holding First Watch Restaurant or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

First Watch Restaurant  vs.  FOX P

First Watch Restaurant

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Watch Restaurant are ranked lower than 7 (%) 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.

35137LAJ4

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FOX P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 35137LAJ4 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with First Watch and 35137LAJ4

The main advantage of trading using opposite First Watch and 35137LAJ4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, 35137LAJ4 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 35137LAJ4 will offset losses from the drop in 35137LAJ4's long position.

The idea behind First Watch Restaurant and FOX P 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.