Correlation Between Compass Group and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Dominos Pizza Group, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Dominos Pizza.
Diversification Opportunities for Compass Group and Dominos Pizza
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Compass and Dominos is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC 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 Compass Group 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 Compass Group PLC 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 Compass Group i.e., Compass Group and Dominos Pizza go up and down completely randomly.
Pair Corralation between Compass Group and Dominos Pizza
Assuming the 90 days horizon Compass Group is expected to generate 1.82 times less return on investment than Dominos Pizza. But when comparing it to its historical volatility, Compass Group PLC is 1.82 times less risky than Dominos Pizza. It trades about 0.13 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 782.00 in Dominos Pizza Group on September 14, 2024 and sell it today you would earn a total of 53.00 from holding Dominos Pizza Group or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. Dominos Pizza Group
Performance |
| Timeline |
| Compass Group PLC |
| Dominos Pizza Group |
Compass Group and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Dominos Pizza
The main advantage of trading using opposite Compass Group and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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.| Compass Group vs. The Cheesecake Factory | Compass Group vs. Darden Restaurants | Compass Group vs. Wingstop | Compass Group vs. Dominos Pizza |
| Dominos Pizza vs. Parker Hannifin | Dominos Pizza vs. Nabors Industries | Dominos Pizza vs. Precision Drilling | Dominos Pizza vs. Tritent International Agriculture |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Stocks Directory Find actively traded stocks across global markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |