Correlation Between Dominos Pizza and Bridger Aerospace

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

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

Diversification Opportunities for Dominos Pizza and Bridger Aerospace

-0.34

Correlation Coefficient

Dominos Pizza  Bridger Aerospace

Very good diversification

The 3 months correlation between Dominos and Bridger is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Common and Bridger Aerospace Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridger Aerospace 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 Common are associated (or correlated) with Bridger Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridger Aerospace has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Bridger Aerospace go up and down completely randomly.

Pair Corralation between Dominos Pizza and Bridger Aerospace

Considering the 90-day investment horizon Dominos Pizza is expected to generate 6.95 times less return on investment than Bridger Aerospace. But when comparing it to its historical volatility, Dominos Pizza Common is 8.94 times less risky than Bridger Aerospace. It trades about 0.1 of its potential returns per unit of risk. Bridger Aerospace Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4.72  in Bridger Aerospace Group on December 29, 2024 and sell it today you would earn a total of  0.34  from holding Bridger Aerospace Group or generate 7.2% return on investment over 90 days.

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

Dominos Pizza Common  vs.  Bridger Aerospace Group

Dominos Pizza Common

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Common are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dominos Pizza showed solid returns over the last few months and may actually be approaching a breakup point.

Bridger Aerospace

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridger Aerospace Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Bridger Aerospace showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dominos Pizza and Bridger Aerospace

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

The idea behind Dominos Pizza Common and Bridger Aerospace 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.