Correlation Between Repligen and Dominos Pizza

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

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

Diversification Opportunities for Repligen and Dominos Pizza

0.46

Correlation Coefficient

Repligen  Dominos Pizza

Very weak diversification

The 3 months correlation between Repligen and Dominos is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Repligen and Dominos Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza and Repligen 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 Repligen 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 has no effect on the direction of Repligen i.e., Repligen and Dominos Pizza go up and down completely randomly.

Pair Corralation between Repligen and Dominos Pizza

Given the investment horizon of 90 days Repligen is expected to generate 2.95 times more return on investment than Dominos Pizza. However, Repligen is 2.95 times more volatile than Dominos Pizza. It trades about 0.11 of its potential returns per unit of risk. Dominos Pizza is currently generating about 0.06 per unit of risk. If you would invest  13,951  in Repligen on September 12, 2024 and sell it today you would earn a total of  1,243  from holding Repligen or generate 8.91% return on investment over 90 days.

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

Repligen  vs.  Dominos Pizza

Repligen

Risk-Adjusted Performance

3 of 100

Insignificant

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

Dominos Pizza

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dominos Pizza may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Repligen and Dominos Pizza

The main advantage of trading using opposite Repligen and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Repligen 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 Repligen and Dominos Pizza 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.