Correlation Between Dominos Pizza and Smart Share

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

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

Diversification Opportunities for Dominos Pizza and Smart Share

0.57

Correlation Coefficient

Dominos Pizza  Smart Share

Very weak diversification

The 3 months correlation between Dominos and Smart is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Common and Smart Share Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Share Global 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 Common are associated (or correlated) with Smart Share. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Share Global has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and Smart Share go up and down completely randomly.

Pair Corralation between Dominos Pizza and Smart Share

Considering the 90-day investment horizon Dominos Pizza Common is expected to generate 1.73 times more return on investment than Smart Share. However, Dominos Pizza is 1.73 times more volatile than Smart Share Global. It trades about 0.1 of its potential returns per unit of risk. Smart Share Global is currently generating about 0.08 per unit of risk. If you would invest  40,070  in Dominos Pizza Common on January 10, 2025 and sell it today you would earn a total of  5,565  from holding Dominos Pizza Common or generate 13.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dominos Pizza Common  vs.  Smart Share Global

Dominos Pizza Common

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dominos Pizza Common are ranked lower than 8 (%) 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.

Smart Share Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Share Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Smart Share may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Pair Trading with Dominos Pizza and Smart Share

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

The idea behind Dominos Pizza Common and Smart Share Global 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.