Correlation Between First Watch and Lavoro Limited
Can any of the company-specific risk be diversified away by investing in both First Watch and Lavoro Limited 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 Lavoro Limited 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 Lavoro Limited Class, you can compare the effects of market volatilities on First Watch and Lavoro Limited 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 Lavoro Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Lavoro Limited.
Diversification Opportunities for First Watch and Lavoro Limited
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Lavoro is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Lavoro Limited Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lavoro Limited Class 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 Lavoro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lavoro Limited Class has no effect on the direction of First Watch i.e., First Watch and Lavoro Limited go up and down completely randomly.
Pair Corralation between First Watch and Lavoro Limited
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 0.44 times more return on investment than Lavoro Limited. However, First Watch Restaurant is 2.26 times less risky than Lavoro Limited. It trades about 0.19 of its potential returns per unit of risk. Lavoro Limited Class is currently generating about 0.02 per unit of risk. If you would invest 1,879 in First Watch Restaurant on November 3, 2024 and sell it today you would earn a total of 219.00 from holding First Watch Restaurant or generate 11.66% 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. Lavoro Limited Class
Performance |
| Timeline |
| First Watch Restaurant |
| Lavoro Limited Class |
First Watch and Lavoro Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Lavoro Limited
The main advantage of trading using opposite First Watch and Lavoro Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Lavoro Limited 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 Lavoro Limited will offset losses from the drop in Lavoro Limited'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 |
| Lavoro Limited vs. HF Sinclair Corp | Lavoro Limited vs. Finnair Oyj | Lavoro Limited vs. Fair Isaac | Lavoro Limited vs. Wizz Air Holdings |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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