Correlation Between Upstart Holdings and Dominos Pizza

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

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

Diversification Opportunities for Upstart Holdings and Dominos Pizza

0.7

Correlation Coefficient

Upstart Holdings  Dominos Pizza

Poor diversification

The 3 months correlation between Upstart and Dominos is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings 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 Upstart Holdings 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 Upstart Holdings 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 Upstart Holdings i.e., Upstart Holdings and Dominos Pizza go up and down completely randomly.

Pair Corralation between Upstart Holdings and Dominos Pizza

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the Dominos Pizza. In addition to that, Upstart Holdings is 2.42 times more volatile than Dominos Pizza Group. It trades about -0.16 of its total potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.34 per unit of volatility. If you would invest  874.00  in Dominos Pizza Group on October 9, 2024 and sell it today you would lose (118.00) from holding Dominos Pizza Group or give up 13.5% of portfolio value over 90 days.

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

Upstart Holdings  vs.  Dominos Pizza Group

Upstart Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Upstart Holdings and Dominos Pizza

The main advantage of trading using opposite Upstart Holdings and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upstart Holdings 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 Upstart Holdings 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.