Correlation Between Marstons PLC and Dominos Pizza

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

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

Diversification Opportunities for Marstons PLC and Dominos Pizza

0.0

Correlation Coefficient

Marstons PLC  Dominos Pizza

Pay attention - limited upside

The 3 months correlation between Marstons and Dominos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC 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 Marstons PLC 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 Marstons PLC 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 Marstons PLC i.e., Marstons PLC and Dominos Pizza go up and down completely randomly.

Pair Corralation between Marstons PLC and Dominos Pizza

Assuming the 90 days horizon Marstons PLC is expected to generate 1.26 times less return on investment than Dominos Pizza. In addition to that, Marstons PLC is 1.15 times more volatile than Dominos Pizza Group. It trades about 0.02 of its total potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.04 per unit of volatility. If you would invest  346.00  in Dominos Pizza Group on September 1, 2024 and sell it today you would earn a total of  66.00  from holding Dominos Pizza Group or generate 19.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	54.34%
Values	Daily Returns

Marstons PLC  vs.  Dominos Pizza Group

Marstons PLC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marstons PLC is not utilizing all of its potentials. The latest 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 Marstons PLC and Dominos Pizza

The main advantage of trading using opposite Marstons PLC and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marstons PLC 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 Marstons PLC 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 Stocks Directory module to find actively traded stocks across global markets.