Correlation Between Dominos Pizza and Singing Machine

Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and Singing Machine 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 Singing Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dominos Pizza and Singing Machine, you can compare the effects of market volatilities on Dominos Pizza and Singing Machine 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 Singing Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and Singing Machine.

Diversification Opportunities for Dominos Pizza and Singing Machine

0.0

Correlation Coefficient

Dominos Pizza  Singing Machine

Pay attention - limited upside

The 3 months correlation between Dominos and Singing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza and Singing Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singing Machine 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 Singing Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singing Machine has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Singing Machine go up and down completely randomly.

Pair Corralation between Dominos Pizza and Singing Machine

If you would invest  49,392  in Dominos Pizza on January 31, 2024 and sell it today you would earn a total of  3,321  from holding Dominos Pizza or generate 6.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dominos Pizza  vs.  Singing Machine

Dominos Pizza

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dominos Pizza showed solid returns over the last few months and may actually be approaching a breakup point.

Singing Machine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Singing Machine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Singing Machine is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dominos Pizza and Singing Machine

The main advantage of trading using opposite Dominos Pizza and Singing Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominos Pizza position performs unexpectedly, Singing Machine 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 Singing Machine will offset losses from the drop in Singing Machine's long position.

The idea behind Dominos Pizza and Singing Machine 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.