Correlation Between Dominos Pizza and OmniAb

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

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

Diversification Opportunities for Dominos Pizza and OmniAb

-0.3

Correlation Coefficient

Dominos Pizza  OmniAb

Very good diversification

The 3 months correlation between Dominos and OmniAb is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and OmniAb Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OmniAb Inc 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 OmniAb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OmniAb Inc has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and OmniAb go up and down completely randomly.

Pair Corralation between Dominos Pizza and OmniAb

Considering the 90-day investment horizon Dominos Pizza is expected to generate 318.82 times less return on investment than OmniAb. But when comparing it to its historical volatility, Dominos Pizza is 88.3 times less risky than OmniAb. It trades about 0.04 of its potential returns per unit of risk. OmniAb Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  82.00  in OmniAb Inc on September 12, 2024 and sell it today you would lose (49.00) from holding OmniAb Inc or give up 59.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.94%
Values	Daily Returns

Dominos Pizza  vs.  OmniAb Inc

Dominos Pizza

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dominos Pizza may actually be approaching a critical reversion point that can send shares even higher in January 2025.

OmniAb Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OmniAb Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, OmniAb may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dominos Pizza and OmniAb

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

The idea behind Dominos Pizza and OmniAb Inc 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.