Correlation Between First Watch and PACIFIC

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

Diversification Opportunities for First Watch and PACIFIC

0.07

Correlation Coefficient

First Watch  PACIFIC

Significant diversification

The 3 months correlation between First and PACIFIC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of First Watch i.e., First Watch and PACIFIC go up and down completely randomly.

Pair Corralation between First Watch and PACIFIC

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the PACIFIC. In addition to that, First Watch is 2.43 times more volatile than PACIFIC GAS AND. It trades about -0.08 of its total potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.14 per unit of volatility. If you would invest  8,693  in PACIFIC GAS AND on December 24, 2024 and sell it today you would lose (898.00) from holding PACIFIC GAS AND or give up 10.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

First Watch Restaurant  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PACIFIC GAS AND investors.

Pair Trading with First Watch and PACIFIC

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

The idea behind First Watch Restaurant and PACIFIC GAS AND 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.