Correlation Between Dominos Pizza and Siriuspoint

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

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

Diversification Opportunities for Dominos Pizza and Siriuspoint

0.39

Correlation Coefficient

Dominos Pizza  Siriuspoint

Weak diversification

The 3 months correlation between Dominos and Siriuspoint is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Siriuspoint go up and down completely randomly.

Pair Corralation between Dominos Pizza and Siriuspoint

Considering the 90-day investment horizon Dominos Pizza is expected to generate 1.17 times more return on investment than Siriuspoint. However, Dominos Pizza is 1.17 times more volatile than Siriuspoint. It trades about 0.15 of its potential returns per unit of risk. Siriuspoint is currently generating about 0.14 per unit of risk. If you would invest  43,220  in Dominos Pizza on February 23, 2024 and sell it today you would earn a total of  6,993  from holding Dominos Pizza or generate 16.18% return on investment over 90 days.

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

Dominos Pizza  vs.  Siriuspoint

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 uncertain basic indicators, Dominos Pizza showed solid returns over the last few months and may actually be approaching a breakup point.

Siriuspoint

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Dominos Pizza and Siriuspoint

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

The idea behind Dominos Pizza and Siriuspoint 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.