Correlation Between Dominos Pizza and Fly E

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

By analyzing existing cross correlation between Dominos Pizza and Fly E Group, Common, you can compare the effects of market volatilities on Dominos Pizza and Fly E 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 Fly E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Fly E.

Diversification Opportunities for Dominos Pizza and Fly E

-0.62

Correlation Coefficient

Dominos Pizza  Fly E

Excellent diversification

The 3 months correlation between Dominos and Fly is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Fly E Group, Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly E Group, 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 Fly E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly E Group, has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Fly E go up and down completely randomly.

Pair Corralation between Dominos Pizza and Fly E

Considering the 90-day investment horizon Dominos Pizza is expected to generate 0.26 times more return on investment than Fly E. However, Dominos Pizza is 3.87 times less risky than Fly E. It trades about 0.15 of its potential returns per unit of risk. Fly E Group, Common is currently generating about -0.06 per unit of risk. If you would invest  40,402  in Dominos Pizza on September 4, 2024 and sell it today you would earn a total of  6,216  from holding Dominos Pizza or generate 15.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dominos Pizza  vs.  Fly E Group, Common

Dominos Pizza

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Dominos Pizza showed solid returns over the last few months and may actually be approaching a breakup point.

Fly E Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fly E Group, Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Dominos Pizza and Fly E

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

The idea behind Dominos Pizza and Fly E Group, Common 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.