Correlation Between First Watch and Toro
Can any of the company-specific risk be diversified away by investing in both First Watch and Toro 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 Toro 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 Toro Co, you can compare the effects of market volatilities on First Watch and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Toro.
Diversification Opportunities for First Watch and Toro
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Toro is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Toro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of First Watch i.e., First Watch and Toro go up and down completely randomly.
Pair Corralation between First Watch and Toro
Given the investment horizon of 90 days First Watch is expected to generate 1.71 times less return on investment than Toro. In addition to that, First Watch is 1.42 times more volatile than Toro Co. It trades about 0.01 of its total potential returns per unit of risk. Toro Co is currently generating about 0.02 per unit of volatility. If you would invest 8,271 in Toro Co on September 4, 2024 and sell it today you would earn a total of 364.00 from holding Toro Co or generate 4.4% 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. Toro Co
Performance |
| Timeline |
| First Watch Restaurant |
| Toro |
First Watch and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Toro
The main advantage of trading using opposite First Watch and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro's long position.| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |