Correlation Between First Watch and Texas Roadhouse
Can any of the company-specific risk be diversified away by investing in both First Watch and Texas Roadhouse 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 Texas Roadhouse 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 Texas Roadhouse, you can compare the effects of market volatilities on First Watch and Texas Roadhouse 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 Texas Roadhouse. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Texas Roadhouse.
Diversification Opportunities for First Watch and Texas Roadhouse
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Texas is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Texas Roadhouse in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Texas Roadhouse 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 Texas Roadhouse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Texas Roadhouse has no effect on the direction of First Watch i.e., First Watch and Texas Roadhouse go up and down completely randomly.
Pair Corralation between First Watch and Texas Roadhouse
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 2.09 times more return on investment than Texas Roadhouse. However, First Watch is 2.09 times more volatile than Texas Roadhouse. It trades about 0.08 of its potential returns per unit of risk. Texas Roadhouse is currently generating about -0.05 per unit of risk. If you would invest 1,759 in First Watch Restaurant on November 27, 2024 and sell it today you would earn a total of 305.00 from holding First Watch Restaurant or generate 17.34% 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. Texas Roadhouse
Performance |
| Timeline |
| First Watch Restaurant |
| Texas Roadhouse |
First Watch and Texas Roadhouse Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Texas Roadhouse
The main advantage of trading using opposite First Watch and Texas Roadhouse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Texas Roadhouse 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 Texas Roadhouse will offset losses from the drop in Texas Roadhouse'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 |
| Texas Roadhouse vs. Brinker International | Texas Roadhouse vs. BJs Restaurants | Texas Roadhouse vs. Papa Johns International | Texas Roadhouse vs. Bloomin Brands |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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