Correlation Between Dominos Pizza and Portillos

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

Diversification Opportunities for Dominos Pizza and Portillos

0.72

Correlation Coefficient

Dominos Pizza  Portillos

Poor diversification

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

Pair Corralation between Dominos Pizza and Portillos

Considering the 90-day investment horizon Dominos Pizza is expected to generate 4.02 times less return on investment than Portillos. But when comparing it to its historical volatility, Dominos Pizza Common is 1.9 times less risky than Portillos. It trades about 0.06 of its potential returns per unit of risk. Portillos is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  910.00  in Portillos on December 30, 2024 and sell it today you would earn a total of  280.00  from holding Portillos or generate 30.77% return on investment over 90 days.

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

Dominos Pizza Common  vs.  Portillos

Dominos Pizza Common

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Common are ranked lower than 4 (%) 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 April 2025.

Portillos

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Portillos are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Portillos displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dominos Pizza and Portillos

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

The idea behind Dominos Pizza Common and Portillos 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .