Correlation Between Dominos Pizza and KINDER

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

Diversification Opportunities for Dominos Pizza and KINDER

0.35

Correlation Coefficient

Dominos Pizza  KINDER

Weak diversification

The 3 months correlation between Dominos and KINDER is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Common and KINDER MORGAN INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN INC 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN INC has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and KINDER go up and down completely randomly.

Pair Corralation between Dominos Pizza and KINDER

Considering the 90-day investment horizon Dominos Pizza Common is expected to generate 1.28 times more return on investment than KINDER. However, Dominos Pizza is 1.28 times more volatile than KINDER MORGAN INC. It trades about 0.07 of its potential returns per unit of risk. KINDER MORGAN INC is currently generating about -0.1 per unit of risk. If you would invest  42,481  in Dominos Pizza Common on December 23, 2024 and sell it today you would earn a total of  3,659  from holding Dominos Pizza Common or generate 8.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.44%
Values	Daily Returns

Dominos Pizza Common  vs.  KINDER MORGAN INC

Dominos Pizza Common

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Common are ranked lower than 5 (%) 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.

KINDER MORGAN INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days KINDER MORGAN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for KINDER MORGAN INC investors.

Pair Trading with Dominos Pizza and KINDER

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

The idea behind Dominos Pizza Common and KINDER MORGAN INC 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.