Correlation Between First Watch and Afya
Can any of the company-specific risk be diversified away by investing in both First Watch and Afya 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 Afya 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 Afya, you can compare the effects of market volatilities on First Watch and Afya 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 Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Afya.
Diversification Opportunities for First Watch and Afya
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Afya is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya 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 Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of First Watch i.e., First Watch and Afya go up and down completely randomly.
Pair Corralation between First Watch and Afya
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 1.92 times more return on investment than Afya. However, First Watch is 1.92 times more volatile than Afya. It trades about 0.15 of its potential returns per unit of risk. Afya is currently generating about 0.0 per unit of risk. If you would invest 1,683 in First Watch Restaurant on August 31, 2024 and sell it today you would earn a total of 206.00 from holding First Watch Restaurant or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. Afya
Performance |
| Timeline |
| First Watch Restaurant |
| Afya |
First Watch and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Afya
The main advantage of trading using opposite First Watch and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Afya 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 Afya will offset losses from the drop in Afya's long position.| First Watch vs. Dine Brands Global | First Watch vs. Bloomin Brands | First Watch vs. BJs Restaurants | First Watch vs. The Cheesecake Factory |
| Afya vs. Lincoln Educational Services | Afya vs. Aquagold International | Afya vs. Thrivent High Yield | Afya vs. Morningstar Unconstrained Allocation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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