Correlation Between Golden Star and First Watch
Can any of the company-specific risk be diversified away by investing in both Golden Star and First Watch 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 Golden Star and First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Star Acquisition and First Watch Restaurant, you can compare the effects of market volatilities on Golden Star and First Watch 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 Golden Star with a short position of First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Star and First Watch.
Diversification Opportunities for Golden Star and First Watch
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Golden and First is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Acquisition and First Watch Restaurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Watch Restaurant and Golden Star 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 Golden Star Acquisition are associated (or correlated) with First Watch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Watch Restaurant has no effect on the direction of Golden Star i.e., Golden Star and First Watch go up and down completely randomly.
Pair Corralation between Golden Star and First Watch
Assuming the 90 days horizon Golden Star Acquisition is expected to generate 0.25 times more return on investment than First Watch. However, Golden Star Acquisition is 4.0 times less risky than First Watch. It trades about 0.05 of its potential returns per unit of risk. First Watch Restaurant is currently generating about -0.13 per unit of risk. If you would invest 1,140 in Golden Star Acquisition on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Golden Star Acquisition or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Star Acquisition vs. First Watch Restaurant
Performance |
| Timeline |
| Golden Star Acquisition |
| First Watch Restaurant |
Golden Star and First Watch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Star and First Watch
The main advantage of trading using opposite Golden Star and First Watch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Star position performs unexpectedly, First Watch 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 First Watch will offset losses from the drop in First Watch's long position.| Golden Star vs. HUMANA INC | Golden Star vs. Barloworld Ltd ADR | Golden Star vs. Morningstar Unconstrained Allocation | Golden Star vs. Thrivent High Yield |
| First Watch vs. Noble Romans | First Watch vs. Good Times Restaurants | First Watch vs. Flanigans Enterprises | First Watch vs. FAT 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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