Correlation Between First Watch and Rivian Automotive
Can any of the company-specific risk be diversified away by investing in both First Watch and Rivian Automotive 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 Rivian Automotive 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 Rivian Automotive, you can compare the effects of market volatilities on First Watch and Rivian Automotive 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 Rivian Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Rivian Automotive.
Diversification Opportunities for First Watch and Rivian Automotive
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Rivian is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Rivian Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivian Automotive 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 Rivian Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivian Automotive has no effect on the direction of First Watch i.e., First Watch and Rivian Automotive go up and down completely randomly.
Pair Corralation between First Watch and Rivian Automotive
Given the investment horizon of 90 days First Watch is expected to generate 1.86 times less return on investment than Rivian Automotive. But when comparing it to its historical volatility, First Watch Restaurant is 1.45 times less risky than Rivian Automotive. It trades about 0.11 of its potential returns per unit of risk. Rivian Automotive is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,029 in Rivian Automotive on September 4, 2024 and sell it today you would earn a total of 158.00 from holding Rivian Automotive or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. Rivian Automotive
Performance |
| Timeline |
| First Watch Restaurant |
| Rivian Automotive |
First Watch and Rivian Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Rivian Automotive
The main advantage of trading using opposite First Watch and Rivian Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Rivian Automotive 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 Rivian Automotive will offset losses from the drop in Rivian Automotive's long position.| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
| Rivian Automotive vs. Tesla Inc | Rivian Automotive vs. Nio Class A | Rivian Automotive vs. Lucid Group | Rivian Automotive vs. Honda Motor Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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