Correlation Between Dominos Pizza and KeyCorp
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and KeyCorp 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 KeyCorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominos Pizza and KeyCorp, you can compare the effects of market volatilities on Dominos Pizza and KeyCorp 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 KeyCorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and KeyCorp.
Diversification Opportunities for Dominos Pizza and KeyCorp
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dominos and KeyCorp is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and KeyCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KeyCorp 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 KeyCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KeyCorp has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and KeyCorp go up and down completely randomly.
Pair Corralation between Dominos Pizza and KeyCorp
Considering the 90-day investment horizon Dominos Pizza is expected to generate 1.83 times more return on investment than KeyCorp. However, Dominos Pizza is 1.83 times more volatile than KeyCorp. It trades about 0.14 of its potential returns per unit of risk. KeyCorp is currently generating about 0.05 per unit of risk. If you would invest 40,402 in Dominos Pizza on September 4, 2024 and sell it today you would earn a total of 5,820 from holding Dominos Pizza or generate 14.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominos Pizza vs. KeyCorp
Performance |
| Timeline |
| Dominos Pizza |
| KeyCorp |
Dominos Pizza and KeyCorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominos Pizza and KeyCorp
The main advantage of trading using opposite Dominos Pizza and KeyCorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, KeyCorp 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 KeyCorp will offset losses from the drop in KeyCorp's long position.| Dominos Pizza vs. Hyatt Hotels | Dominos Pizza vs. Smart Share Global | Dominos Pizza vs. Sweetgreen | Dominos Pizza vs. Wyndham Hotels Resorts |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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