Correlation Between Dominos Pizza and Asbury Automotive
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Asbury Automotive 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 Dominos Pizza and Asbury Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominos Pizza and Asbury Automotive Group, you can compare the effects of market volatilities on Dominos Pizza and Asbury Automotive 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 Dominos Pizza with a short position of Asbury Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Asbury Automotive.
Diversification Opportunities for Dominos Pizza and Asbury Automotive
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dominos and Asbury is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Asbury Automotive Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asbury Automotive and Dominos Pizza 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 Dominos Pizza are associated (or correlated) with Asbury Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asbury Automotive has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Asbury Automotive go up and down completely randomly.
Pair Corralation between Dominos Pizza and Asbury Automotive
Considering the 90-day investment horizon Dominos Pizza is expected to generate 1.25 times less return on investment than Asbury Automotive. But when comparing it to its historical volatility, Dominos Pizza is 1.3 times less risky than Asbury Automotive. It trades about 0.06 of its potential returns per unit of risk. Asbury Automotive Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 19,856 in Asbury Automotive Group on September 4, 2024 and sell it today you would earn a total of 6,646 from holding Asbury Automotive Group or generate 33.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominos Pizza vs. Asbury Automotive Group
Performance |
| Timeline |
| Dominos Pizza |
| Asbury Automotive |
Dominos Pizza and Asbury Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominos Pizza and Asbury Automotive
The main advantage of trading using opposite Dominos Pizza and Asbury Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Asbury Automotive 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 Asbury Automotive will offset losses from the drop in Asbury Automotive's long position.| Dominos Pizza vs. Hyatt Hotels | Dominos Pizza vs. Smart Share Global | Dominos Pizza vs. Sweetgreen | Dominos Pizza vs. Wyndham Hotels Resorts |
| Asbury Automotive vs. Sonic Automotive | Asbury Automotive vs. Lithia Motors | Asbury Automotive vs. AutoNation | Asbury Automotive vs. Penske Automotive Group |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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