Correlation Between Dominos Pizza and PlayAGS

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

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

Diversification Opportunities for Dominos Pizza and PlayAGS

0.11

Correlation Coefficient

Dominos Pizza  PlayAGS

Average diversification

The 3 months correlation between Dominos and PlayAGS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and PlayAGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PlayAGS and Dominos Pizza 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 Dominos Pizza are associated (or correlated) with PlayAGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PlayAGS has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and PlayAGS go up and down completely randomly.

Pair Corralation between Dominos Pizza and PlayAGS

Considering the 90-day investment horizon Dominos Pizza is expected to under-perform the PlayAGS. In addition to that, Dominos Pizza is 5.79 times more volatile than PlayAGS. It trades about -0.18 of its total potential returns per unit of risk. PlayAGS is currently generating about -0.27 per unit of volatility. If you would invest  1,166  in PlayAGS on September 23, 2024 and sell it today you would lose (17.00) from holding PlayAGS or give up 1.46% of portfolio value over 90 days.

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

Dominos Pizza  vs.  PlayAGS

Dominos Pizza

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dominos Pizza is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

PlayAGS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PlayAGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PlayAGS is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dominos Pizza and PlayAGS

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

The idea behind Dominos Pizza and PlayAGS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.