Correlation Between First Watch and Navigators

Can any of the company-specific risk be diversified away by investing in both First Watch and Navigators 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 Navigators 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 The Navigators Group, you can compare the effects of market volatilities on First Watch and Navigators 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 Navigators. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Navigators.

Diversification Opportunities for First Watch and Navigators

0.0

Correlation Coefficient

First Watch  Navigators

Pay attention - limited upside

The 3 months correlation between First and Navigators is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and The Navigators Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navigators Group 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 Navigators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navigators Group has no effect on the direction of First Watch i.e., First Watch and Navigators go up and down completely randomly.

Pair Corralation between First Watch and Navigators

If you would invest  2,540  in First Watch Restaurant on February 1, 2024 and sell it today you would earn a total of  12.00  from holding First Watch Restaurant or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

First Watch Restaurant  vs.  The Navigators Group

First Watch Restaurant

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Watch Restaurant are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, First Watch reported solid returns over the last few months and may actually be approaching a breakup point.

Navigators Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Navigators Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Navigators is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with First Watch and Navigators

The main advantage of trading using opposite First Watch and Navigators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Navigators 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 Navigators will offset losses from the drop in Navigators' long position.

The idea behind First Watch Restaurant and The Navigators Group 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.