Correlation Between Westrock Coffee and First Watch
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee 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 Westrock Coffee and First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and First Watch Restaurant, you can compare the effects of market volatilities on Westrock Coffee 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 Westrock Coffee with a short position of First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and First Watch.
Diversification Opportunities for Westrock Coffee and First Watch
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westrock and First is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and First Watch go up and down completely randomly.
Pair Corralation between Westrock Coffee and First Watch
Given the investment horizon of 90 days Westrock Coffee is expected to under-perform the First Watch. In addition to that, Westrock Coffee is 1.59 times more volatile than First Watch Restaurant. It trades about -0.36 of its total potential returns per unit of risk. First Watch Restaurant is currently generating about 0.04 per unit of volatility. If you would invest 1,866 in First Watch Restaurant on September 24, 2024 and sell it today you would earn a total of 22.00 from holding First Watch Restaurant or generate 1.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Westrock Coffee vs. First Watch Restaurant
Performance |
Timeline |
Westrock Coffee |
First Watch Restaurant |
Westrock Coffee and First Watch Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Westrock Coffee and First Watch
The main advantage of trading using opposite Westrock Coffee and First Watch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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.Westrock Coffee vs. J J Snack | Westrock Coffee vs. Central Garden Pet | Westrock Coffee vs. Lancaster Colony | Westrock Coffee vs. The A2 Milk |
First Watch vs. Dine Brands Global | First Watch vs. Bloomin Brands | First Watch vs. BJs Restaurants | First Watch vs. The Cheesecake Factory |
Check out your portfolio center.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |