Correlation Between First Watch and SHERWIN

Can any of the company-specific risk be diversified away by investing in both First Watch and SHERWIN 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 SHERWIN 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 SHERWIN WILLIAMS 45 percent, you can compare the effects of market volatilities on First Watch and SHERWIN 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 SHERWIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and SHERWIN.

Diversification Opportunities for First Watch and SHERWIN

0.0

Correlation Coefficient

First Watch  SHERWIN

Pay attention - limited upside

The 3 months correlation between First and SHERWIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and SHERWIN WILLIAMS 45 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHERWIN WILLIAMS 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 SHERWIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHERWIN WILLIAMS has no effect on the direction of First Watch i.e., First Watch and SHERWIN go up and down completely randomly.

Pair Corralation between First Watch and SHERWIN

If you would invest  1,585  in First Watch Restaurant on September 5, 2024 and sell it today you would earn a total of  279.00  from holding First Watch Restaurant or generate 17.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

First Watch Restaurant  vs.  SHERWIN WILLIAMS 45 percent

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 inconsistent basic indicators, First Watch reported solid returns over the last few months and may actually be approaching a breakup point.

SHERWIN WILLIAMS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHERWIN WILLIAMS 45 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SHERWIN 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 SHERWIN

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

The idea behind First Watch Restaurant and SHERWIN WILLIAMS 45 percent 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 Commodity Directory module to find actively traded commodities issued by global exchanges.