Correlation Between First Watch and Brunswick
Can any of the company-specific risk be diversified away by investing in both First Watch and Brunswick 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 Brunswick 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 Brunswick, you can compare the effects of market volatilities on First Watch and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Brunswick.
Diversification Opportunities for First Watch and Brunswick
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Brunswick is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of First Watch i.e., First Watch and Brunswick go up and down completely randomly.
Pair Corralation between First Watch and Brunswick
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 1.71 times more return on investment than Brunswick. However, First Watch is 1.71 times more volatile than Brunswick. It trades about 0.12 of its potential returns per unit of risk. Brunswick is currently generating about 0.01 per unit of risk. If you would invest 1,721 in First Watch Restaurant on September 4, 2024 and sell it today you would earn a total of 165.00 from holding First Watch Restaurant or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. Brunswick
Performance |
| Timeline |
| First Watch Restaurant |
| Brunswick |
First Watch and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Brunswick
The main advantage of trading using opposite First Watch and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
| Brunswick vs. Thor Industries | Brunswick vs. BRP Inc | Brunswick vs. EZGO Technologies | Brunswick vs. Polaris Industries |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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