Correlation Between First Watch and Rectitude Holdings
Can any of the company-specific risk be diversified away by investing in both First Watch and Rectitude Holdings 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 Rectitude Holdings 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 Rectitude Holdings Ltd, you can compare the effects of market volatilities on First Watch and Rectitude Holdings 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 Rectitude Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Rectitude Holdings.
Diversification Opportunities for First Watch and Rectitude Holdings
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Rectitude is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Rectitude Holdings Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rectitude Holdings 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 Rectitude Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rectitude Holdings has no effect on the direction of First Watch i.e., First Watch and Rectitude Holdings go up and down completely randomly.
Pair Corralation between First Watch and Rectitude Holdings
Given the investment horizon of 90 days First Watch is expected to generate 19.6 times less return on investment than Rectitude Holdings. But when comparing it to its historical volatility, First Watch Restaurant is 1.42 times less risky than Rectitude Holdings. It trades about 0.01 of its potential returns per unit of risk. Rectitude Holdings Ltd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Rectitude Holdings Ltd on September 4, 2024 and sell it today you would earn a total of 196.00 from holding Rectitude Holdings Ltd or generate 49.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 46.96% |
| Values | Daily Returns |
First Watch Restaurant vs. Rectitude Holdings Ltd
Performance |
| Timeline |
| First Watch Restaurant |
| Rectitude Holdings |
First Watch and Rectitude Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Rectitude Holdings
The main advantage of trading using opposite First Watch and Rectitude Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Rectitude Holdings 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 Rectitude Holdings will offset losses from the drop in Rectitude Holdings' long position.| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
| Rectitude Holdings vs. First Watch Restaurant | Rectitude Holdings vs. Summit Materials | Rectitude Holdings vs. Highway Holdings Limited | Rectitude Holdings vs. Cracker Barrel Old |
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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