Correlation Between Ark Restaurants and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Ark Restaurants 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 Ark Restaurants and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ark Restaurants Corp and Dominos Pizza, you can compare the effects of market volatilities on Ark Restaurants 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 Ark Restaurants with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ark Restaurants and Dominos Pizza.
Diversification Opportunities for Ark Restaurants and Dominos Pizza
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ark and Dominos is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Ark Restaurants Corp and Dominos Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza and Ark Restaurants 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 Ark Restaurants Corp 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 Ark Restaurants i.e., Ark Restaurants and Dominos Pizza go up and down completely randomly.
Pair Corralation between Ark Restaurants and Dominos Pizza
Given the investment horizon of 90 days Ark Restaurants Corp is expected to under-perform the Dominos Pizza. But the stock apears to be less risky and, when comparing its historical volatility, Ark Restaurants Corp is 1.13 times less risky than Dominos Pizza. The stock trades about -0.32 of its potential returns per unit of risk. The Dominos Pizza is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 41,724 in Dominos Pizza on August 27, 2024 and sell it today you would earn a total of 5,194 from holding Dominos Pizza or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ark Restaurants Corp vs. Dominos Pizza
Performance |
| Timeline |
| Ark Restaurants Corp |
| Dominos Pizza |
Ark Restaurants and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ark Restaurants and Dominos Pizza
The main advantage of trading using opposite Ark Restaurants and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ark Restaurants 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.| Ark Restaurants vs. Nathans Famous | Ark Restaurants vs. Flanigans Enterprises | Ark Restaurants vs. Good Times Restaurants | Ark Restaurants vs. Auburn National Bancorporation |
| Dominos Pizza vs. Brinker International | Dominos Pizza vs. Jack In The | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. Wingstop |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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