Correlation Between First Watch and Morgan Stanley
Can any of the company-specific risk be diversified away by investing in both First Watch and Morgan Stanley 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 Morgan Stanley 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 Morgan Stanley Direct, you can compare the effects of market volatilities on First Watch and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Morgan Stanley.
Diversification Opportunities for First Watch and Morgan Stanley
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Morgan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Morgan Stanley Direct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Direct 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Direct has no effect on the direction of First Watch i.e., First Watch and Morgan Stanley go up and down completely randomly.
Pair Corralation between First Watch and Morgan Stanley
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 2.22 times more return on investment than Morgan Stanley. However, First Watch is 2.22 times more volatile than Morgan Stanley Direct. It trades about -0.03 of its potential returns per unit of risk. Morgan Stanley Direct is currently generating about -0.06 per unit of risk. If you would invest 1,945 in First Watch Restaurant on October 13, 2024 and sell it today you would lose (33.00) from holding First Watch Restaurant or give up 1.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. Morgan Stanley Direct
Performance |
| Timeline |
| First Watch Restaurant |
| Morgan Stanley Direct |
First Watch and Morgan Stanley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Morgan Stanley
The main advantage of trading using opposite First Watch and Morgan Stanley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Morgan Stanley 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 Morgan Stanley will offset losses from the drop in Morgan Stanley'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 |
| Morgan Stanley vs. First Watch Restaurant | Morgan Stanley vs. Cannae Holdings | Morgan Stanley vs. BJs Restaurants | Morgan Stanley vs. Hewlett Packard Enterprise |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |