Correlation Between Comerica and Domino’s Pizza

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

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

Diversification Opportunities for Comerica and Domino’s Pizza

-0.42

Correlation Coefficient

Comerica  Domino’s Pizza

Very good diversification

The 3 months correlation between Comerica and Domino’s is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Comerica 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 Comerica 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 Comerica are associated (or correlated) with Domino’s 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 Comerica i.e., Comerica and Domino’s Pizza go up and down completely randomly.

Pair Corralation between Comerica and Domino’s Pizza

Considering the 90-day investment horizon Comerica is expected to under-perform the Domino’s Pizza. In addition to that, Comerica is 1.09 times more volatile than Dominos Pizza Group. It trades about -0.02 of its total potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.01 per unit of volatility. If you would invest  782.00  in Dominos Pizza Group on December 21, 2024 and sell it today you would earn a total of  3.00  from holding Dominos Pizza Group or generate 0.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Comerica  vs.  Dominos Pizza Group

Comerica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comerica has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Comerica is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Dominos Pizza Group

Risk-Adjusted Performance

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, Domino’s 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 Comerica and Domino’s Pizza

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

The idea behind Comerica 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.