Correlation Between Moonpig Group and Dominos Pizza

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

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

Diversification Opportunities for Moonpig Group and Dominos Pizza

0.71

Correlation Coefficient

Moonpig Group  Dominos Pizza

Poor diversification

The 3 months correlation between Moonpig and Dominos is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Moonpig Group PLC 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 Moonpig Group 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 Moonpig Group PLC 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 Moonpig Group i.e., Moonpig Group and Dominos Pizza go up and down completely randomly.

Pair Corralation between Moonpig Group and Dominos Pizza

Assuming the 90 days trading horizon Moonpig Group PLC is expected to under-perform the Dominos Pizza. In addition to that, Moonpig Group is 1.93 times more volatile than Dominos Pizza Group. It trades about -0.12 of its total potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.23 per unit of volatility. If you would invest  34,020  in Dominos Pizza Group on September 23, 2024 and sell it today you would lose (3,140) from holding Dominos Pizza Group or give up 9.23% of portfolio value over 90 days.

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

Moonpig Group PLC  vs.  Dominos Pizza Group

Moonpig Group PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Moonpig Group PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Moonpig Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dominos Pizza Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Dominos Pizza is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Moonpig Group and Dominos Pizza

The main advantage of trading using opposite Moonpig Group and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonpig Group 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 Moonpig Group PLC 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.