Correlation Between Autogrill SpA and Dominos Pizza

Can any of the company-specific risk be diversified away by investing in both Autogrill SpA and Dominos Pizza 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 Autogrill SpA and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Autogrill SpA ADR and Dominos Pizza Group, you can compare the effects of market volatilities on Autogrill SpA and Dominos Pizza 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 Autogrill SpA with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autogrill SpA and Dominos Pizza.

Diversification Opportunities for Autogrill SpA and Dominos Pizza

0.51

Correlation Coefficient

Autogrill SpA  Dominos Pizza

Very weak diversification

The 3 months correlation between Autogrill and Dominos is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Autogrill SpA ADR and Dominos Pizza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Group and Autogrill SpA 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 Autogrill SpA ADR are associated (or correlated) with Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Group has no effect on the direction of Autogrill SpA i.e., Autogrill SpA and Dominos Pizza go up and down completely randomly.

Pair Corralation between Autogrill SpA and Dominos Pizza

Assuming the 90 days horizon Autogrill SpA ADR is expected to generate 0.8 times more return on investment than Dominos Pizza. However, Autogrill SpA ADR is 1.25 times less risky than Dominos Pizza. It trades about 0.08 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.04 per unit of risk. If you would invest  625.00  in Autogrill SpA ADR on September 1, 2024 and sell it today you would earn a total of  200.00  from holding Autogrill SpA ADR or generate 32.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	57.25%
Values	Daily Returns

Autogrill SpA ADR  vs.  Dominos Pizza Group

Autogrill SpA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autogrill SpA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Autogrill SpA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dominos Pizza Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Autogrill SpA and Dominos Pizza

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

The idea behind Autogrill SpA ADR and Dominos Pizza 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.