Correlation Between City Office and Dominos Pizza

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

By analyzing existing cross correlation between City Office REIT and Dominos Pizza Group, you can compare the effects of market volatilities on City Office 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 City Office with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Dominos Pizza.

Diversification Opportunities for City Office and Dominos Pizza

-0.25

Correlation Coefficient

City Office  Dominos Pizza

Very good diversification

The 3 months correlation between City and Dominos is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding City Office REIT 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 City Office 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 City Office REIT 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 City Office i.e., City Office and Dominos Pizza go up and down completely randomly.

Pair Corralation between City Office and Dominos Pizza

Assuming the 90 days trading horizon City Office REIT is expected to generate 2.75 times more return on investment than Dominos Pizza. However, City Office is 2.75 times more volatile than Dominos Pizza Group. It trades about 0.12 of its potential returns per unit of risk. Dominos Pizza Group is currently generating about -0.15 per unit of risk. If you would invest  1,920  in City Office REIT on May 6, 2025 and sell it today you would earn a total of  561.00  from holding City Office REIT or generate 29.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.85%
Values	Daily Returns

City Office REIT  vs.  Dominos Pizza Group

City Office REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in City Office REIT are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, City Office sustained solid returns over the last few months and may actually be approaching a breakup point.

Dominos Pizza Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dominos Pizza Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with City Office and Dominos Pizza

The main advantage of trading using opposite City Office and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office 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 City Office REIT 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.