Correlation Between First Watch and Hall Of
Can any of the company-specific risk be diversified away by investing in both First Watch and Hall Of 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 Hall Of 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 Hall of Fame, you can compare the effects of market volatilities on First Watch and Hall Of 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 Hall Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Hall Of.
Diversification Opportunities for First Watch and Hall Of
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Hall is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Hall of Fame in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hall of Fame 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 Hall Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hall of Fame has no effect on the direction of First Watch i.e., First Watch and Hall Of go up and down completely randomly.
Pair Corralation between First Watch and Hall Of
Given the investment horizon of 90 days First Watch is expected to generate 54.47 times less return on investment than Hall Of. But when comparing it to its historical volatility, First Watch Restaurant is 21.7 times less risky than Hall Of. It trades about 0.03 of its potential returns per unit of risk. Hall of Fame is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7.79 in Hall of Fame on September 2, 2024 and sell it today you would lose (7.03) from holding Hall of Fame or give up 90.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.77% |
| Values | Daily Returns |
First Watch Restaurant vs. Hall of Fame
Performance |
| Timeline |
| First Watch Restaurant |
| Hall of Fame |
First Watch and Hall Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Hall Of
The main advantage of trading using opposite First Watch and Hall Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Hall Of 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 Hall Of will offset losses from the drop in Hall Of's long position.The idea behind First Watch Restaurant and Hall of Fame pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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