Correlation Between Dominos Pizza and RH

Can any of the company-specific risk be diversified away by investing in both Dominos Pizza and RH 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 RH 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 RH, you can compare the effects of market volatilities on Dominos Pizza and RH 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 RH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominos Pizza and RH.

Diversification Opportunities for Dominos Pizza and RH

0.37

Correlation Coefficient

Dominos Pizza  RH

Weak diversification

The 3 months correlation between Dominos and RH is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dominos Pizza Common and RH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RH 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 RH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RH has no effect on the direction of Dominos Pizza i.e., Dominos Pizza and RH go up and down completely randomly.

Pair Corralation between Dominos Pizza and RH

Considering the 90-day investment horizon Dominos Pizza Common is expected to under-perform the RH. But the stock apears to be less risky and, when comparing its historical volatility, Dominos Pizza Common is 2.99 times less risky than RH. The stock trades about -0.02 of its potential returns per unit of risk. The RH is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  18,287  in RH on May 6, 2025 and sell it today you would earn a total of  1,789  from holding RH or generate 9.78% return on investment over 90 days.

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

Dominos Pizza Common  vs.  RH

Dominos Pizza Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dominos Pizza Common has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Dominos Pizza is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

RH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RH are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, RH demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dominos Pizza and RH

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

The idea behind Dominos Pizza Common and RH 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.