Correlation Between Nexstar Broadcasting and Domino’s Pizza

Can any of the company-specific risk be diversified away by investing in both Nexstar Broadcasting 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 Nexstar Broadcasting 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 Nexstar Broadcasting Group and Dominos Pizza Group, you can compare the effects of market volatilities on Nexstar Broadcasting 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 Nexstar Broadcasting with a short position of Domino’s Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexstar Broadcasting and Domino’s Pizza.

Diversification Opportunities for Nexstar Broadcasting and Domino’s Pizza

0.48

Correlation Coefficient

Nexstar Broadcasting  Domino’s Pizza

Very weak diversification

The 3 months correlation between Nexstar and Domino’s is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nexstar Broadcasting 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 Nexstar Broadcasting 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 Nexstar Broadcasting 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 Nexstar Broadcasting i.e., Nexstar Broadcasting and Domino’s Pizza go up and down completely randomly.

Pair Corralation between Nexstar Broadcasting and Domino’s Pizza

Given the investment horizon of 90 days Nexstar Broadcasting Group is expected to generate 0.57 times more return on investment than Domino’s Pizza. However, Nexstar Broadcasting Group is 1.75 times less risky than Domino’s Pizza. It trades about -0.11 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.18 per unit of risk. If you would invest  15,993  in Nexstar Broadcasting Group on October 25, 2024 and sell it today you would lose (523.00) from holding Nexstar Broadcasting Group or give up 3.27% of portfolio value over 90 days.

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

Nexstar Broadcasting Group  vs.  Dominos Pizza Group

Nexstar Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexstar Broadcasting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 latest fragile performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nexstar Broadcasting and Domino’s Pizza

The main advantage of trading using opposite Nexstar Broadcasting and Domino’s Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexstar Broadcasting 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 Nexstar Broadcasting 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.