Correlation Between Yum Brands and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Yum Brands 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 Yum Brands and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yum Brands and Dominos Pizza Group, you can compare the effects of market volatilities on Yum Brands 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 Yum Brands with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yum Brands and Dominos Pizza.
Diversification Opportunities for Yum Brands and Dominos Pizza
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yum and Dominos is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Yum Brands 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 Yum Brands 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 Yum Brands 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 Yum Brands i.e., Yum Brands and Dominos Pizza go up and down completely randomly.
Pair Corralation between Yum Brands and Dominos Pizza
Considering the 90-day investment horizon Yum Brands is expected to generate 2.99 times less return on investment than Dominos Pizza. But when comparing it to its historical volatility, Yum Brands is 2.15 times less risky than Dominos Pizza. It trades about 0.02 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 791.00 in Dominos Pizza Group on September 14, 2024 and sell it today you would earn a total of 44.00 from holding Dominos Pizza Group or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yum Brands vs. Dominos Pizza Group
Performance |
| Timeline |
| Yum Brands |
| Dominos Pizza Group |
Yum Brands and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yum Brands and Dominos Pizza
The main advantage of trading using opposite Yum Brands and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yum Brands 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 Yum Brands and Dominos Pizza Group 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. 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |