Correlation Between First Watch and RBC Bearings
Can any of the company-specific risk be diversified away by investing in both First Watch and RBC Bearings 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 RBC Bearings 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 RBC Bearings Incorporated, you can compare the effects of market volatilities on First Watch and RBC Bearings 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 RBC Bearings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and RBC Bearings.
Diversification Opportunities for First Watch and RBC Bearings
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and RBC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and RBC Bearings Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RBC Bearings 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 RBC Bearings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RBC Bearings has no effect on the direction of First Watch i.e., First Watch and RBC Bearings go up and down completely randomly.
Pair Corralation between First Watch and RBC Bearings
Given the investment horizon of 90 days First Watch is expected to generate 5.37 times less return on investment than RBC Bearings. In addition to that, First Watch is 1.76 times more volatile than RBC Bearings Incorporated. It trades about 0.01 of its total potential returns per unit of risk. RBC Bearings Incorporated is currently generating about 0.07 per unit of volatility. If you would invest 26,450 in RBC Bearings Incorporated on September 4, 2024 and sell it today you would earn a total of 7,653 from holding RBC Bearings Incorporated or generate 28.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. RBC Bearings Incorporated
Performance |
| Timeline |
| First Watch Restaurant |
| RBC Bearings |
First Watch and RBC Bearings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and RBC Bearings
The main advantage of trading using opposite First Watch and RBC Bearings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, RBC Bearings 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 RBC Bearings will offset losses from the drop in RBC Bearings' long position.| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
| RBC Bearings vs. Lincoln Electric Holdings | RBC Bearings vs. Kennametal | RBC Bearings vs. Toro Co | RBC Bearings vs. Snap On |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Stocks Directory Find actively traded stocks across global markets |