Correlation Between Charter Communications and First Watch

Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and First Watch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Charter Communications and First Watch Restaurant, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of First Watch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and First Watch.

Diversification Opportunities for Charter Communications and First Watch

-0.52

Correlation Coefficient

Charter Communications  First Watch

Excellent diversification

The 3 months correlation between Charter and First is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and First Watch go up and down completely randomly.

Pair Corralation between Charter Communications and First Watch

Given the investment horizon of 90 days Charter Communications is expected to generate 0.64 times more return on investment than First Watch. However, Charter Communications is 1.55 times less risky than First Watch. It trades about 0.06 of its potential returns per unit of risk. First Watch Restaurant is currently generating about -0.02 per unit of risk. If you would invest  37,091  in Charter Communications on April 1, 2025 and sell it today you would earn a total of  3,006  from holding Charter Communications or generate 8.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Charter Communications  vs.  First Watch Restaurant

Charter Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Charter Communications may actually be approaching a critical reversion point that can send shares even higher in July 2025.

First Watch Restaurant

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Charter Communications and First Watch

The main advantage of trading using opposite Charter Communications and First Watch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.

The idea behind Charter Communications and First Watch Restaurant 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.