Correlation Between Dominos Pizza and Simon Property
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Simon Property 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 Simon Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominos Pizza and Simon Property Group, you can compare the effects of market volatilities on Dominos Pizza and Simon Property 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 Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Simon Property.
Diversification Opportunities for Dominos Pizza and Simon Property
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dominos and Simon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group 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 Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Simon Property go up and down completely randomly.
Pair Corralation between Dominos Pizza and Simon Property
Considering the 90-day investment horizon Dominos Pizza is expected to generate 2.25 times less return on investment than Simon Property. In addition to that, Dominos Pizza is 1.37 times more volatile than Simon Property Group. It trades about 0.04 of its total potential returns per unit of risk. Simon Property Group is currently generating about 0.11 per unit of volatility. If you would invest 13,337 in Simon Property Group on August 28, 2024 and sell it today you would earn a total of 4,674 from holding Simon Property Group or generate 35.05% 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. Simon Property Group
Performance |
| Timeline |
| Dominos Pizza |
| Simon Property Group |
Dominos Pizza and Simon Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominos Pizza and Simon Property
The main advantage of trading using opposite Dominos Pizza and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.| Dominos Pizza vs. Brinker International | Dominos Pizza vs. Jack In The | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. Wingstop |
| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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