Correlation Between Dominos Pizza and Restaurant Brands

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Restaurant Brands 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 Restaurant Brands 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 Restaurant Brands International, you can compare the effects of market volatilities on Dominos Pizza and Restaurant Brands 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 Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Restaurant Brands.

Diversification Opportunities for Dominos Pizza and Restaurant Brands

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dominos and Restaurant is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Common and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands 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 Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Restaurant Brands go up and down completely randomly.

Pair Corralation between Dominos Pizza and Restaurant Brands

Considering the 90-day investment horizon Dominos Pizza Common is expected to generate 1.38 times more return on investment than Restaurant Brands. However, Dominos Pizza is 1.38 times more volatile than Restaurant Brands International. It trades about 0.06 of its potential returns per unit of risk. Restaurant Brands International is currently generating about -0.07 per unit of risk. If you would invest  46,467  in Dominos Pizza Common on December 1, 2024 and sell it today you would earn a total of  2,504  from holding Dominos Pizza Common or generate 5.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dominos Pizza Common  vs.  Restaurant Brands Internationa

 Performance 
       Timeline  
Dominos Pizza Common 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
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.
Restaurant Brands 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Restaurant Brands International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Restaurant Brands is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Dominos Pizza and Restaurant Brands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dominos Pizza and Restaurant Brands

The main advantage of trading using opposite Dominos Pizza and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.
The idea behind Dominos Pizza Common and Restaurant Brands International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

Other Complementary Tools

Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Equity Valuation
Check real value of public entities based on technical and fundamental data
Odds Of Bankruptcy
Get analysis of equity chance of financial distress in the next 2 years
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Idea Analyzer
Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas