Correlation Between Dominos Pizza and Cardinal Health
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Cardinal Health 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 Cardinal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominos Pizza and Cardinal Health, you can compare the effects of market volatilities on Dominos Pizza and Cardinal Health 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 Cardinal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Cardinal Health.
Diversification Opportunities for Dominos Pizza and Cardinal Health
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dominos and Cardinal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Cardinal Health go up and down completely randomly.
Pair Corralation between Dominos Pizza and Cardinal Health
Considering the 90-day investment horizon Dominos Pizza is expected to generate 0.77 times more return on investment than Cardinal Health. However, Dominos Pizza is 1.3 times less risky than Cardinal Health. It trades about 0.32 of its potential returns per unit of risk. Cardinal Health is currently generating about 0.2 per unit of risk. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominos Pizza vs. Cardinal Health
Performance |
| Timeline |
| Dominos Pizza |
| Cardinal Health |
Dominos Pizza and Cardinal Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominos Pizza and Cardinal Health
The main advantage of trading using opposite Dominos Pizza and Cardinal Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Cardinal Health 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 Cardinal Health will offset losses from the drop in Cardinal Health's long position.| Dominos Pizza vs. Brinker International | Dominos Pizza vs. Jack In The | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. Wingstop |
| Cardinal Health vs. Henry Schein | Cardinal Health vs. Owens Minor | Cardinal Health vs. Patterson Companies | Cardinal Health vs. McKesson |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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