Correlation Between KeyCorp and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both KeyCorp 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 KeyCorp and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Dominos Pizza, you can compare the effects of market volatilities on KeyCorp 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 KeyCorp with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Dominos Pizza.
Diversification Opportunities for KeyCorp and Dominos Pizza
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between KeyCorp and Dominos is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Dominos Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza and KeyCorp 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 KeyCorp 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 has no effect on the direction of KeyCorp i.e., KeyCorp and Dominos Pizza go up and down completely randomly.
Pair Corralation between KeyCorp and Dominos Pizza
Assuming the 90 days trading horizon KeyCorp is expected to generate 5.72 times less return on investment than Dominos Pizza. But when comparing it to its historical volatility, KeyCorp is 1.83 times less risky than Dominos Pizza. It trades about 0.05 of its potential returns per unit of risk. Dominos Pizza is currently generating about 0.14 of returns per unit of risk over similar time horizon. 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 |
KeyCorp vs. Dominos Pizza
Performance |
| Timeline |
| KeyCorp |
| Dominos Pizza |
KeyCorp and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Dominos Pizza
The main advantage of trading using opposite KeyCorp and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp 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.The idea behind KeyCorp and Dominos Pizza pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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