Correlation Between Academy Sports and Omega Healthcare

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

Diversification Opportunities for Academy Sports and Omega Healthcare

AcademyOmegaDiversified AwayAcademyOmegaDiversified Away100%
-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Academy and Omega is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports and and Omega Healthcare Investors, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omega Healthcare Inv and Academy Sports 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 Academy Sports and are associated (or correlated) with Omega Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omega Healthcare Inv has no effect on the direction of Academy Sports i.e., Academy Sports and Omega Healthcare go up and down completely randomly.

Pair Corralation between Academy Sports and Omega Healthcare

Assuming the 90 days trading horizon Academy Sports and is expected to under-perform the Omega Healthcare. In addition to that, Academy Sports is 2.2 times more volatile than Omega Healthcare Investors,. It trades about -0.29 of its total potential returns per unit of risk. Omega Healthcare Investors, is currently generating about -0.15 per unit of volatility. If you would invest  7,532  in Omega Healthcare Investors, on November 18, 2024 and sell it today you would lose (288.00) from holding Omega Healthcare Investors, or give up 3.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy83.33%
ValuesDaily Returns

Academy Sports and  vs.  Omega Healthcare Investors,

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-5051015
JavaScript chart by amCharts 3.21.15A2SO34 O2HI34
       Timeline  
Academy Sports 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Academy Sports and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Academy Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Omega Healthcare Inv 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Omega Healthcare Investors, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, Omega Healthcare is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb727374757677787980

Academy Sports and Omega Healthcare Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.87-3.65-2.42-1.20.01.22.423.634.85 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15A2SO34 O2HI34
       Returns  

Pair Trading with Academy Sports and Omega Healthcare

The main advantage of trading using opposite Academy Sports and Omega Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Omega Healthcare 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 Omega Healthcare will offset losses from the drop in Omega Healthcare's long position.
The idea behind Academy Sports and and Omega Healthcare Investors, 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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