Correlation Between Learning Technologies and Domino’s Pizza

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

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

Diversification Opportunities for Learning Technologies and Domino’s Pizza

-0.09

Correlation Coefficient

Learning Technologies  Domino’s Pizza

Good diversification

The 3 months correlation between Learning and Domino’s is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Learning Technologies Group 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 Learning Technologies 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 Learning Technologies Group are associated (or correlated) with Domino’s 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 Learning Technologies i.e., Learning Technologies and Domino’s Pizza go up and down completely randomly.

Pair Corralation between Learning Technologies and Domino’s Pizza

Assuming the 90 days trading horizon Learning Technologies Group is expected to generate 0.9 times more return on investment than Domino’s Pizza. However, Learning Technologies Group is 1.11 times less risky than Domino’s Pizza. It trades about 0.03 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.07 per unit of risk. If you would invest  9,790  in Learning Technologies Group on December 24, 2024 and sell it today you would earn a total of  170.00  from holding Learning Technologies Group or generate 1.74% return on investment over 90 days.

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

Learning Technologies Group  vs.  Dominos Pizza Group

Learning Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Learning Technologies Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Learning Technologies is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dominos Pizza Group

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Learning Technologies and Domino’s Pizza

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

The idea behind Learning Technologies Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.