Correlation Between BARRICK and First Watch

Can any of the company-specific risk be diversified away by investing in both BARRICK and First Watch 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 BARRICK and First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BARRICK NORTH AMER and First Watch Restaurant, you can compare the effects of market volatilities on BARRICK and First Watch 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 BARRICK with a short position of First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of BARRICK and First Watch.

Diversification Opportunities for BARRICK and First Watch

-0.35

Correlation Coefficient

BARRICK  First Watch

Very good diversification

The 3 months correlation between BARRICK and First is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BARRICK NORTH AMER and First Watch Restaurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Watch Restaurant and BARRICK 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 BARRICK NORTH AMER are associated (or correlated) with First Watch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Watch Restaurant has no effect on the direction of BARRICK i.e., BARRICK and First Watch go up and down completely randomly.

Pair Corralation between BARRICK and First Watch

Assuming the 90 days trading horizon BARRICK NORTH AMER is expected to generate 19.85 times more return on investment than First Watch. However, BARRICK is 19.85 times more volatile than First Watch Restaurant. It trades about 0.04 of its potential returns per unit of risk. First Watch Restaurant is currently generating about 0.03 per unit of risk. If you would invest  10,881  in BARRICK NORTH AMER on October 23, 2024 and sell it today you would lose (1,698) from holding BARRICK NORTH AMER or give up 15.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.06%
Values	Daily Returns

BARRICK NORTH AMER  vs.  First Watch Restaurant

BARRICK NORTH AMER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BARRICK NORTH AMER 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 BARRICK NORTH AMER investors.

First Watch Restaurant

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Watch Restaurant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, First Watch may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BARRICK and First Watch

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

The idea behind BARRICK NORTH AMER and First Watch Restaurant 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.