Correlation Between Equinix and Dominos Pizza

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

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

Diversification Opportunities for Equinix and Dominos Pizza

0.79

Correlation Coefficient

Equinix  Dominos Pizza

Poor diversification

The 3 months correlation between Equinix and Dominos is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Equinix and Dominos Pizza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Group and Equinix 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 Equinix are associated (or correlated) with Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Group has no effect on the direction of Equinix i.e., Equinix and Dominos Pizza go up and down completely randomly.

Pair Corralation between Equinix and Dominos Pizza

Given the investment horizon of 90 days Equinix is expected to generate 0.59 times more return on investment than Dominos Pizza. However, Equinix is 1.7 times less risky than Dominos Pizza. It trades about -0.12 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.34 per unit of risk. If you would invest  96,898  in Equinix on October 9, 2024 and sell it today you would lose (2,898) from holding Equinix or give up 2.99% of portfolio value over 90 days.

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

Equinix  vs.  Dominos Pizza Group

Equinix

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equinix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Equinix may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dominos Pizza Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominos Pizza Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Dominos Pizza is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Equinix and Dominos Pizza

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

The idea behind Equinix and Dominos Pizza 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.