Correlation Between BJs Restaurants and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both BJs 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 BJs 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 BJs Restaurants and Dominos Pizza, you can compare the effects of market volatilities on BJs 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 BJs Restaurants with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Restaurants and Dominos Pizza.
Diversification Opportunities for BJs Restaurants and Dominos Pizza
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BJs and Dominos is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding BJs Restaurants and Dominos Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza and BJs 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 BJs Restaurants 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 BJs Restaurants i.e., BJs Restaurants and Dominos Pizza go up and down completely randomly.
Pair Corralation between BJs Restaurants and Dominos Pizza
Given the investment horizon of 90 days BJs Restaurants is expected to under-perform the Dominos Pizza. In addition to that, BJs Restaurants is 1.72 times more volatile than Dominos Pizza. It trades about -0.01 of its total potential returns per unit of risk. Dominos Pizza is currently generating about 0.12 per unit of volatility. If you would invest 42,678 in Dominos Pizza on August 23, 2024 and sell it today you would earn a total of 1,907 from holding Dominos Pizza or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Restaurants vs. Dominos Pizza
Performance |
| Timeline |
| BJs Restaurants |
| Dominos Pizza |
BJs Restaurants and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Restaurants and Dominos Pizza
The main advantage of trading using opposite BJs Restaurants and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs 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.| BJs Restaurants vs. Dine Brands Global | BJs Restaurants vs. Brinker International | BJs Restaurants vs. Bloomin Brands | BJs Restaurants vs. The Cheesecake Factory |
| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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