Correlation Between First Watch and NSTAR
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By analyzing existing cross correlation between First Watch Restaurant and NSTAR ELEC 44, you can compare the effects of market volatilities on First Watch and NSTAR 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 NSTAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and NSTAR.
Diversification Opportunities for First Watch and NSTAR
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and NSTAR is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and NSTAR ELEC 44 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR ELEC 44 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 NSTAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR ELEC 44 has no effect on the direction of First Watch i.e., First Watch and NSTAR go up and down completely randomly.
Pair Corralation between First Watch and NSTAR
Given the investment horizon of 90 days First Watch is expected to generate 14.76 times less return on investment than NSTAR. In addition to that, First Watch is 2.32 times more volatile than NSTAR ELEC 44. It trades about 0.01 of its total potential returns per unit of risk. NSTAR ELEC 44 is currently generating about 0.47 per unit of volatility. If you would invest 8,665 in NSTAR ELEC 44 on September 13, 2024 and sell it today you would earn a total of 230.00 from holding NSTAR ELEC 44 or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 27.27% |
| Values | Daily Returns |
First Watch Restaurant vs. NSTAR ELEC 44
Performance |
| Timeline |
| First Watch Restaurant |
| NSTAR ELEC 44 |
First Watch and NSTAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and NSTAR
The main advantage of trading using opposite First Watch and NSTAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, NSTAR 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 NSTAR will offset losses from the drop in NSTAR's long position.The idea behind First Watch Restaurant and NSTAR ELEC 44 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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