Correlation Between Auburn National and Dominos Pizza

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

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

Diversification Opportunities for Auburn National and Dominos Pizza

-0.47

Correlation Coefficient

Auburn National  Dominos Pizza

Very good diversification

The 3 months correlation between Auburn and Dominos is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Auburn National Bancorp. and Dominos Pizza Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Common and Auburn National 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 Auburn National Bancorporation 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 Common has no effect on the direction of Auburn National i.e., Auburn National and Dominos Pizza go up and down completely randomly.

Pair Corralation between Auburn National and Dominos Pizza

Given the investment horizon of 90 days Auburn National is expected to generate 3.77 times less return on investment than Dominos Pizza. In addition to that, Auburn National is 1.06 times more volatile than Dominos Pizza Common. It trades about 0.04 of its total potential returns per unit of risk. Dominos Pizza Common is currently generating about 0.17 per unit of volatility. If you would invest  45,585  in Dominos Pizza Common on December 4, 2024 and sell it today you would earn a total of  2,593  from holding Dominos Pizza Common or generate 5.69% return on investment over 90 days.

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

Auburn National Bancorp.  vs.  Dominos Pizza Common

Auburn National Banc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auburn National Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, Auburn National is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Dominos Pizza Common

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Common are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dominos Pizza is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Auburn National and Dominos Pizza

The main advantage of trading using opposite Auburn National and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn National 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 Auburn National Bancorporation and Dominos Pizza 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.