Correlation Between Fiesta Restaurant and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Fiesta Restaurant and Dominos Pizza 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 Fiesta Restaurant and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fiesta Restaurant Group and Dominos Pizza Group, you can compare the effects of market volatilities on Fiesta Restaurant and Dominos Pizza 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 Fiesta Restaurant with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fiesta Restaurant and Dominos Pizza.
Diversification Opportunities for Fiesta Restaurant and Dominos Pizza
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fiesta and Dominos is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fiesta Restaurant Group and Dominos Pizza Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Group and Fiesta Restaurant 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 Fiesta Restaurant Group are associated (or correlated) with Dominos Pizza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominos Pizza Group has no effect on the direction of Fiesta Restaurant i.e., Fiesta Restaurant and Dominos Pizza go up and down completely randomly.
Pair Corralation between Fiesta Restaurant and Dominos Pizza
Given the investment horizon of 90 days Fiesta Restaurant is expected to generate 1.04 times less return on investment than Dominos Pizza. But when comparing it to its historical volatility, Fiesta Restaurant Group is 1.46 times less risky than Dominos Pizza. It trades about 0.05 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 646.00 in Dominos Pizza Group on September 14, 2024 and sell it today you would earn a total of 189.00 from holding Dominos Pizza Group or generate 29.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 36.18% |
| Values | Daily Returns |
Fiesta Restaurant Group vs. Dominos Pizza Group
Performance |
| Timeline |
| Fiesta Restaurant |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dominos Pizza Group |
Fiesta Restaurant and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fiesta Restaurant and Dominos Pizza
The main advantage of trading using opposite Fiesta Restaurant and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fiesta Restaurant position performs unexpectedly, Dominos Pizza 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 Dominos Pizza will offset losses from the drop in Dominos Pizza's long position.| Fiesta Restaurant vs. BJs Restaurants | Fiesta Restaurant vs. Dine Brands Global | Fiesta Restaurant vs. Brinker International | Fiesta Restaurant vs. FAT Brands |
| Dominos Pizza vs. Parker Hannifin | Dominos Pizza vs. Nabors Industries | Dominos Pizza vs. Precision Drilling | Dominos Pizza vs. Tritent International Agriculture |
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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