Correlation Between CAVA Group, and Dominos Pizza

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

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

Diversification Opportunities for CAVA Group, and Dominos Pizza

0.7

Correlation Coefficient

CAVA Group,  Dominos Pizza

Poor diversification

The 3 months correlation between CAVA and Dominos is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CAVA Group, and Dominos Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza and CAVA Group, 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 CAVA Group, 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 has no effect on the direction of CAVA Group, i.e., CAVA Group, and Dominos Pizza go up and down completely randomly.

Pair Corralation between CAVA Group, and Dominos Pizza

Given the investment horizon of 90 days CAVA Group, is expected to generate 3.46 times less return on investment than Dominos Pizza. In addition to that, CAVA Group, is 1.66 times more volatile than Dominos Pizza. It trades about 0.02 of its total potential returns per unit of risk. Dominos Pizza is currently generating about 0.13 per unit of volatility. If you would invest  40,433  in Dominos Pizza on September 12, 2024 and sell it today you would earn a total of  4,983  from holding Dominos Pizza or generate 12.32% return on investment over 90 days.

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

CAVA Group,  vs.  Dominos Pizza

CAVA Group,

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CAVA Group, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CAVA Group, is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Dominos Pizza

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dominos Pizza may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CAVA Group, and Dominos Pizza

The main advantage of trading using opposite CAVA Group, and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAVA Group, 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 CAVA Group, and Dominos Pizza 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.