Correlation Between Dominos Pizza and Wingstop
Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Wingstop 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 Wingstop into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominos Pizza Common and Wingstop, you can compare the effects of market volatilities on Dominos Pizza and Wingstop 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 Wingstop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Wingstop.
Diversification Opportunities for Dominos Pizza and Wingstop
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dominos and Wingstop is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Common and Wingstop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wingstop 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 Common are associated (or correlated) with Wingstop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wingstop has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Wingstop go up and down completely randomly.
Pair Corralation between Dominos Pizza and Wingstop
Considering the 90-day investment horizon Dominos Pizza Common is expected to generate 1.27 times more return on investment than Wingstop. However, Dominos Pizza is 1.27 times more volatile than Wingstop. It trades about 0.01 of its potential returns per unit of risk. Wingstop is currently generating about -0.22 per unit of risk. If you would invest 42,764 in Dominos Pizza Common on October 20, 2024 and sell it today you would lose (29.00) from holding Dominos Pizza Common or give up 0.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dominos Pizza Common vs. Wingstop
Performance |
| Timeline |
| Dominos Pizza Common |
| Wingstop |
Dominos Pizza and Wingstop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominos Pizza and Wingstop
The main advantage of trading using opposite Dominos Pizza and Wingstop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Wingstop 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 Wingstop will offset losses from the drop in Wingstop's long position.| Dominos Pizza vs. Yum Brands | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. McDonalds | Dominos Pizza vs. Wingstop |
| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza Common |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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