Correlation Between 49327M3E2 and First Watch

Can any of the company-specific risk be diversified away by investing in both 49327M3E2 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 49327M3E2 and First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KEY 415 08 AUG 25 and First Watch Restaurant, you can compare the effects of market volatilities on 49327M3E2 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 49327M3E2 with a short position of First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of 49327M3E2 and First Watch.

Diversification Opportunities for 49327M3E2 and First Watch

0.27

Correlation Coefficient

49327M3E2  First Watch

Modest diversification

The 3 months correlation between 49327M3E2 and First is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding KEY 415 08 AUG 25 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 49327M3E2 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 KEY 415 08 AUG 25 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 49327M3E2 i.e., 49327M3E2 and First Watch go up and down completely randomly.

Pair Corralation between 49327M3E2 and First Watch

Assuming the 90 days trading horizon KEY 415 08 AUG 25 is expected to generate 0.33 times more return on investment than First Watch. However, KEY 415 08 AUG 25 is 3.04 times less risky than First Watch. It trades about -0.13 of its potential returns per unit of risk. First Watch Restaurant is currently generating about -0.08 per unit of risk. If you would invest  9,944  in KEY 415 08 AUG 25 on December 24, 2024 and sell it today you would lose (694.00) from holding KEY 415 08 AUG 25 or give up 6.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.16%
Values	Daily Returns

KEY 415 08 AUG 25  vs.  First Watch Restaurant

KEY 415 08

Risk-Adjusted Performance

Very Weak

Over the last 90 days KEY 415 08 AUG 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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 KEY 415 08 AUG 25 investors.

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.

Pair Trading with 49327M3E2 and First Watch

The main advantage of trading using opposite 49327M3E2 and First Watch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 49327M3E2 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 KEY 415 08 AUG 25 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.