Correlation Between Neogen and First Watch
Can any of the company-specific risk be diversified away by investing in both Neogen 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 Neogen and First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neogen and First Watch Restaurant, you can compare the effects of market volatilities on Neogen 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 Neogen with a short position of First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neogen and First Watch.
Diversification Opportunities for Neogen and First Watch
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Neogen and First is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Neogen 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 Neogen 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 Neogen 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 Neogen i.e., Neogen and First Watch go up and down completely randomly.
Pair Corralation between Neogen and First Watch
Given the investment horizon of 90 days Neogen is expected to under-perform the First Watch. But the stock apears to be less risky and, when comparing its historical volatility, Neogen is 1.18 times less risky than First Watch. The stock trades about -0.02 of its potential returns per unit of risk. The First Watch Restaurant is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,927 in First Watch Restaurant on September 3, 2024 and sell it today you would lose (41.00) from holding First Watch Restaurant or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neogen vs. First Watch Restaurant
Performance |
| Timeline |
| Neogen |
| First Watch Restaurant |
Neogen and First Watch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neogen and First Watch
The main advantage of trading using opposite Neogen and First Watch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neogen 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.| Neogen vs. Qiagen NV | Neogen vs. Aclaris Therapeutics | Neogen vs. IQVIA Holdings | Neogen vs. Medpace Holdings |
| First Watch vs. Highway Holdings Limited | First Watch vs. QCR Holdings | First Watch vs. Partner Communications | First Watch vs. Acumen Pharmaceuticals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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