Correlation Between Dominos Pizza and One Group

Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and One Group 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 One Group 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 One Group Hospitality, you can compare the effects of market volatilities on Dominos Pizza and One Group 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 One Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and One Group.

Diversification Opportunities for Dominos Pizza and One Group

-0.05

Correlation Coefficient

Dominos Pizza  One Group

Good diversification

The 3 months correlation between Dominos and One is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Group and One Group Hospitality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Group Hospitality 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 One Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Group Hospitality has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and One Group go up and down completely randomly.

Pair Corralation between Dominos Pizza and One Group

Assuming the 90 days horizon Dominos Pizza Group is expected to under-perform the One Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Dominos Pizza Group is 1.64 times less risky than One Group. The pink sheet trades about -0.04 of its potential returns per unit of risk. The One Group Hospitality is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  368.00  in One Group Hospitality on October 21, 2024 and sell it today you would lose (36.00) from holding One Group Hospitality or give up 9.78% of portfolio value over 90 days.

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

Dominos Pizza Group  vs.  One Group Hospitality

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 latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

One Group Hospitality

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Group Hospitality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, One Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dominos Pizza and One Group

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

The idea behind Dominos Pizza Group and One Group Hospitality 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.