Correlation Between First Watch and Tourmaline Bio

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

Diversification Opportunities for First Watch and Tourmaline Bio

0.26

Correlation Coefficient

First Watch  Tourmaline Bio

Modest diversification

The 3 months correlation between First and Tourmaline is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Tourmaline Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Bio 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 Tourmaline Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Bio has no effect on the direction of First Watch i.e., First Watch and Tourmaline Bio go up and down completely randomly.

Pair Corralation between First Watch and Tourmaline Bio

Given the investment horizon of 90 days First Watch is expected to generate 6.38 times less return on investment than Tourmaline Bio. But when comparing it to its historical volatility, First Watch Restaurant is 1.13 times less risky than Tourmaline Bio. It trades about 0.03 of its potential returns per unit of risk. Tourmaline Bio is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Tourmaline Bio on May 14, 2025 and sell it today you would earn a total of  522.00  from holding Tourmaline Bio or generate 33.68% return on investment over 90 days.

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

First Watch Restaurant  vs.  Tourmaline Bio

First Watch Restaurant

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Watch Restaurant are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Tourmaline Bio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Bio are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, Tourmaline Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First Watch and Tourmaline Bio

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

The idea behind First Watch Restaurant and Tourmaline Bio 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.