Correlation Between Bill and Dominos Pizza

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

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

Diversification Opportunities for Bill and Dominos Pizza

0.64

Correlation Coefficient

Bill  Dominos Pizza

Poor diversification

The 3 months correlation between Bill and Dominos is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings 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 Bill 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 Bill Com Holdings 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 Bill i.e., Bill and Dominos Pizza go up and down completely randomly.

Pair Corralation between Bill and Dominos Pizza

Given the investment horizon of 90 days Bill Com Holdings is expected to generate 1.64 times more return on investment than Dominos Pizza. However, Bill is 1.64 times more volatile than Dominos Pizza Group. It trades about 0.2 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.01 per unit of risk. If you would invest  5,582  in Bill Com Holdings on October 11, 2024 and sell it today you would earn a total of  2,667  from holding Bill Com Holdings or generate 47.78% return on investment over 90 days.

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

Bill Com Holdings  vs.  Dominos Pizza Group

Bill Com Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong forward-looking signals, Dominos Pizza is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bill and Dominos Pizza

The main advantage of trading using opposite Bill and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bill 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 Bill Com Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.