Correlation Between First Watch and Dow Jones
Can any of the company-specific risk be diversified away by investing in both First Watch and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on First Watch and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Dow Jones.
Diversification Opportunities for First Watch and Dow Jones
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Dow is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of First Watch i.e., First Watch and Dow Jones go up and down completely randomly.
Pair Corralation between First Watch and Dow Jones
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 4.48 times more return on investment than Dow Jones. However, First Watch is 4.48 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 1,685 in First Watch Restaurant on August 24, 2024 and sell it today you would earn a total of 61.00 from holding First Watch Restaurant or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
First Watch Restaurant vs. Dow Jones Industrial
Performance |
| Timeline |
First Watch and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
First Watch Restaurant
Pair trading matchups for First Watch
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with First Watch and Dow Jones
The main advantage of trading using opposite First Watch and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| First Watch vs. Dine Brands Global | First Watch vs. Bloomin Brands | First Watch vs. BJs Restaurants | First Watch vs. The Cheesecake Factory |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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