Correlation Between First Watch and Frontdoor
Can any of the company-specific risk be diversified away by investing in both First Watch and Frontdoor 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 Frontdoor 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 Frontdoor, you can compare the effects of market volatilities on First Watch and Frontdoor 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 Frontdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Frontdoor.
Diversification Opportunities for First Watch and Frontdoor
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between First and Frontdoor is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Frontdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontdoor 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 Frontdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontdoor has no effect on the direction of First Watch i.e., First Watch and Frontdoor go up and down completely randomly.
Pair Corralation between First Watch and Frontdoor
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 1.64 times more return on investment than Frontdoor. However, First Watch is 1.64 times more volatile than Frontdoor. It trades about 0.15 of its potential returns per unit of risk. Frontdoor is currently generating about 0.23 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. Frontdoor
Performance |
| Timeline |
| First Watch Restaurant |
| Frontdoor |
First Watch and Frontdoor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Frontdoor
The main advantage of trading using opposite First Watch and Frontdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Frontdoor 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 Frontdoor will offset losses from the drop in Frontdoor'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 |
| Frontdoor vs. Bright Horizons Family | Frontdoor vs. Smart Share Global | Frontdoor vs. Mister Car Wash | Frontdoor vs. Carriage Services |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |