Correlation Between Merck and Dominos Pizza
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and Dominos Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Dominos Pizza Common, you can compare the effects of market volatilities on Merck 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 Merck with a short position of Dominos Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Dominos Pizza.
Diversification Opportunities for Merck and Dominos Pizza
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Merck and Dominos is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company and Dominos Pizza Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominos Pizza Common and Merck 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 Merck Company 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 Common has no effect on the direction of Merck i.e., Merck and Dominos Pizza go up and down completely randomly.
Pair Corralation between Merck and Dominos Pizza
Considering the 90-day investment horizon Merck Company is expected to under-perform the Dominos Pizza. In addition to that, Merck is 1.17 times more volatile than Dominos Pizza Common. It trades about -0.12 of its total potential returns per unit of risk. Dominos Pizza Common is currently generating about 0.06 per unit of volatility. If you would invest 43,824 in Dominos Pizza Common on March 10, 2025 and sell it today you would earn a total of 2,997 from holding Dominos Pizza Common or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Dominos Pizza Common
Performance |
| Timeline |
| Merck Company |
| Dominos Pizza Common |
Merck and Dominos Pizza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Dominos Pizza
The main advantage of trading using opposite Merck and Dominos Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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 Merck Company and Dominos Pizza Common 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. Brinker International | Dominos Pizza vs. Jack In The | Dominos Pizza vs. The Wendys Co | Dominos Pizza vs. Wingstop |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |