Correlation Between Qualys and Dominos Pizza

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

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

Diversification Opportunities for Qualys and Dominos Pizza

0.68

Correlation Coefficient

Qualys  Dominos Pizza

Poor diversification

The 3 months correlation between Qualys and Dominos is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Qualys Inc 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 Qualys 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 Qualys Inc 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 Qualys i.e., Qualys and Dominos Pizza go up and down completely randomly.

Pair Corralation between Qualys and Dominos Pizza

Given the investment horizon of 90 days Qualys Inc is expected to generate 0.82 times more return on investment than Dominos Pizza. However, Qualys Inc is 1.22 times less risky than Dominos Pizza. It trades about -0.46 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.44 per unit of risk. If you would invest  15,388  in Qualys Inc on October 11, 2024 and sell it today you would lose (1,946) from holding Qualys Inc or give up 12.65% of portfolio value over 90 days.

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

Qualys Inc  vs.  Dominos Pizza Group

Qualys Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qualys Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Qualys 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Qualys and Dominos Pizza

The main advantage of trading using opposite Qualys and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qualys 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 Qualys Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.