Correlation Between Prosiebensat and Dominos Pizza

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

By analyzing existing cross correlation between Prosiebensat 1 Media and Dominos Pizza Group, you can compare the effects of market volatilities on Prosiebensat 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 Prosiebensat with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and Dominos Pizza.

Diversification Opportunities for Prosiebensat and Dominos Pizza

-0.32

Correlation Coefficient

Prosiebensat  Dominos Pizza

Very good diversification

The 3 months correlation between Prosiebensat and Dominos is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media 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 Prosiebensat 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 Prosiebensat 1 Media 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 Prosiebensat i.e., Prosiebensat and Dominos Pizza go up and down completely randomly.

Pair Corralation between Prosiebensat and Dominos Pizza

Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the Dominos Pizza. In addition to that, Prosiebensat is 1.43 times more volatile than Dominos Pizza Group. It trades about -0.07 of its total potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.03 per unit of volatility. If you would invest  30,660  in Dominos Pizza Group on October 24, 2024 and sell it today you would lose (1,460) from holding Dominos Pizza Group or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Prosiebensat 1 Media  vs.  Dominos Pizza Group

Prosiebensat 1 Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosiebensat 1 Media 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private 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. In spite of rather sound technical and fundamental indicators, Dominos Pizza is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Prosiebensat and Dominos Pizza

The main advantage of trading using opposite Prosiebensat and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat 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 Prosiebensat 1 Media 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.