Correlation Between First Watch and Carriage Services

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

Diversification Opportunities for First Watch and Carriage Services

-0.19

Correlation Coefficient

First Watch  Carriage Services

Good diversification

The 3 months correlation between First and Carriage is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Carriage Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carriage Services 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 Carriage Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carriage Services has no effect on the direction of First Watch i.e., First Watch and Carriage Services go up and down completely randomly.

Pair Corralation between First Watch and Carriage Services

Given the investment horizon of 90 days First Watch Restaurant is expected to under-perform the Carriage Services. In addition to that, First Watch is 2.9 times more volatile than Carriage Services. It trades about -0.01 of its total potential returns per unit of risk. Carriage Services is currently generating about 0.14 per unit of volatility. If you would invest  4,024  in Carriage Services on May 2, 2025 and sell it today you would earn a total of  453.00  from holding Carriage Services or generate 11.26% return on investment over 90 days.

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

First Watch Restaurant  vs.  Carriage Services

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Carriage Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Carriage Services are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Carriage Services may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with First Watch and Carriage Services

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

The idea behind First Watch Restaurant and Carriage Services 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.