Correlation Between Dominos Pizza and Holley
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Holley 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 Holley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominos Pizza and Holley Inc, you can compare the effects of market volatilities on Dominos Pizza and Holley 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 Holley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Holley.
Diversification Opportunities for Dominos Pizza and Holley
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dominos and Holley is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Holley Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holley Inc 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 Holley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holley Inc has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Holley go up and down completely randomly.
Pair Corralation between Dominos Pizza and Holley
Considering the 90-day investment horizon Dominos Pizza is expected to generate 0.65 times more return on investment than Holley. However, Dominos Pizza is 1.55 times less risky than Holley. It trades about 0.09 of its potential returns per unit of risk. Holley Inc is currently generating about 0.01 per unit of risk. If you would invest 42,592 in Dominos Pizza on August 26, 2024 and sell it today you would earn a total of 2,743 from holding Dominos Pizza or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominos Pizza vs. Holley Inc
Performance |
| Timeline |
| Dominos Pizza |
| Holley Inc |
Dominos Pizza and Holley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominos Pizza and Holley
The main advantage of trading using opposite Dominos Pizza and Holley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Holley 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 Holley will offset losses from the drop in Holley's long position.| Dominos Pizza vs. Brinker International | Dominos Pizza vs. Jack In The | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. Wingstop |
| Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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