Correlation Between First Watch and U Power
Can any of the company-specific risk be diversified away by investing in both First Watch and U Power 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 U Power 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 U Power Limited, you can compare the effects of market volatilities on First Watch and U Power 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 U Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and U Power.
Diversification Opportunities for First Watch and U Power
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between First and UCAR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and U Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Power Limited 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 U Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Power Limited has no effect on the direction of First Watch i.e., First Watch and U Power go up and down completely randomly.
Pair Corralation between First Watch and U Power
Given the investment horizon of 90 days First Watch Restaurant is expected to generate 0.92 times more return on investment than U Power. However, First Watch Restaurant is 1.09 times less risky than U Power. It trades about 0.12 of its potential returns per unit of risk. U Power Limited is currently generating about -0.21 per unit of risk. If you would invest 1,721 in First Watch Restaurant on September 4, 2024 and sell it today you would earn a total of 165.00 from holding First Watch Restaurant or generate 9.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. U Power Limited
Performance |
| Timeline |
| First Watch Restaurant |
| U Power Limited |
First Watch and U Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and U Power
The main advantage of trading using opposite First Watch and U Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, U Power 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 U Power will offset losses from the drop in U Power's long position.| First Watch vs. Hyatt Hotels | First Watch vs. Smart Share Global | First Watch vs. Sweetgreen | First Watch vs. Wyndham Hotels Resorts |
| U Power vs. Sonic Automotive | U Power vs. Lithia Motors | U Power vs. AutoNation | U Power vs. Penske Automotive Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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