Correlation Between First Watch and Red Rock
Can any of the company-specific risk be diversified away by investing in both First Watch and Red Rock 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 Red Rock 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 Red Rock Resorts, you can compare the effects of market volatilities on First Watch and Red Rock 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 Red Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Watch and Red Rock.
Diversification Opportunities for First Watch and Red Rock
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between First and Red is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Watch Restaurant and Red Rock Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Rock Resorts 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 Red Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Rock Resorts has no effect on the direction of First Watch i.e., First Watch and Red Rock go up and down completely randomly.
Pair Corralation between First Watch and Red Rock
Given the investment horizon of 90 days First Watch is expected to generate 8.75 times less return on investment than Red Rock. In addition to that, First Watch is 1.49 times more volatile than Red Rock Resorts. It trades about 0.01 of its total potential returns per unit of risk. Red Rock Resorts is currently generating about 0.13 per unit of volatility. If you would invest 4,224 in Red Rock Resorts on March 31, 2025 and sell it today you would earn a total of 961.00 from holding Red Rock Resorts or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Watch Restaurant vs. Red Rock Resorts
Performance |
| Timeline |
| First Watch Restaurant |
| Red Rock Resorts |
First Watch and Red Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Watch and Red Rock
The main advantage of trading using opposite First Watch and Red Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Watch position performs unexpectedly, Red Rock 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 Red Rock will offset losses from the drop in Red Rock's long position.| First Watch vs. Dine Brands Global | First Watch vs. Bloomin Brands | First Watch vs. BJs Restaurants | First Watch vs. The Cheesecake Factory |
| Red Rock vs. Golden Entertainment | Red Rock vs. Century Casinos | Red Rock vs. Studio City International | Red Rock vs. Ballys Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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