Correlation Between Dominos Pizza and Wynn Resorts

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

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

Diversification Opportunities for Dominos Pizza and Wynn Resorts

-0.24

Correlation Coefficient

Dominos Pizza  Wynn Resorts

Very good diversification

The 3 months correlation between Dominos and Wynn is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Wynn Resorts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wynn Resorts Limited 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 are associated (or correlated) with Wynn Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wynn Resorts Limited has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Wynn Resorts go up and down completely randomly.

Pair Corralation between Dominos Pizza and Wynn Resorts

Considering the 90-day investment horizon Dominos Pizza is expected to under-perform the Wynn Resorts. But the stock apears to be less risky and, when comparing its historical volatility, Dominos Pizza is 1.38 times less risky than Wynn Resorts. The stock trades about -0.18 of its potential returns per unit of risk. The Wynn Resorts Limited is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  9,129  in Wynn Resorts Limited on September 23, 2024 and sell it today you would lose (234.00) from holding Wynn Resorts Limited or give up 2.56% of portfolio value over 90 days.

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

Dominos Pizza  vs.  Wynn Resorts Limited

Dominos Pizza

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Dominos Pizza is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Wynn Resorts Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wynn Resorts Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Wynn Resorts displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dominos Pizza and Wynn Resorts

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

The idea behind Dominos Pizza and Wynn Resorts Limited 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.