Correlation Between Dominos Pizza and Liontrust Asset

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

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

Diversification Opportunities for Dominos Pizza and Liontrust Asset

-0.72

Correlation Coefficient

Dominos Pizza  Liontrust Asset

Pay attention - limited upside

The 3 months correlation between Dominos and Liontrust is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Group and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana and Dominos Pizza 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 Dominos Pizza Group are associated (or correlated) with Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Liontrust Asset go up and down completely randomly.

Pair Corralation between Dominos Pizza and Liontrust Asset

Assuming the 90 days trading horizon Dominos Pizza Group is expected to generate 0.66 times more return on investment than Liontrust Asset. However, Dominos Pizza Group is 1.52 times less risky than Liontrust Asset. It trades about 0.15 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.05 per unit of risk. If you would invest  28,740  in Dominos Pizza Group on September 12, 2024 and sell it today you would earn a total of  4,720  from holding Dominos Pizza Group or generate 16.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Dominos Pizza Group  vs.  Liontrust Asset Management

Dominos Pizza Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Dominos Pizza exhibited solid returns over the last few months and may actually be approaching a breakup point.

Liontrust Asset Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Dominos Pizza and Liontrust Asset

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

The idea behind Dominos Pizza Group and Liontrust Asset Management 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 Stocks Directory module to find actively traded stocks across global markets.