Correlation Between ACI Worldwide and DominoS Pizza

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Can any of the company-specific risk be diversified away by investing in both ACI Worldwide 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 ACI Worldwide and DominoS Pizza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACI Worldwide and DominoS Pizza Enterprises, you can compare the effects of market volatilities on ACI Worldwide 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 ACI Worldwide with a short position of DominoS Pizza. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACI Worldwide and DominoS Pizza.

Diversification Opportunities for ACI Worldwide and DominoS Pizza

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between ACI Worldwide and DominoS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and DominoS Pizza Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DominoS Pizza Enterprises and ACI Worldwide 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 ACI Worldwide 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 Enterprises has no effect on the direction of ACI Worldwide i.e., ACI Worldwide and DominoS Pizza go up and down completely randomly.

Pair Corralation between ACI Worldwide and DominoS Pizza

Given the investment horizon of 90 days ACI Worldwide is expected to generate 1.01 times more return on investment than DominoS Pizza. However, ACI Worldwide is 1.01 times more volatile than DominoS Pizza Enterprises. It trades about -0.01 of its potential returns per unit of risk. DominoS Pizza Enterprises is currently generating about -0.01 per unit of risk. If you would invest  2,175  in ACI Worldwide on September 10, 2022 and sell it today you would lose (87.00)  from holding ACI Worldwide or give up 4.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.73%
ValuesDaily Returns

ACI Worldwide  vs.  DominoS Pizza Enterprises

 Performance (%) 
       Timeline  
ACI Worldwide 
ACI Worldwide Performance
0 of 100
Over the last 90 days ACI Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

ACI Worldwide Price Channel

DominoS Pizza Enterprises 
DominoS Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in DominoS Pizza Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DominoS Pizza is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

DominoS Price Channel

ACI Worldwide and DominoS Pizza Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ACI Worldwide and DominoS Pizza

The main advantage of trading using opposite ACI Worldwide and DominoS Pizza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACI Worldwide 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.
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The idea behind ACI Worldwide and DominoS Pizza Enterprises 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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