Correlation Between Academy Sports and BCE

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

By analyzing existing cross correlation between Academy Sports Outdoors and BCE Inc, you can compare the effects of market volatilities on Academy Sports and BCE 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 BCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and BCE.

Diversification Opportunities for Academy Sports and BCE

-0.49

Correlation Coefficient

Academy Sports  BCE

Very good diversification

The 3 months correlation between Academy and BCE is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and BCE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BCE Inc 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 Outdoors are associated (or correlated) with BCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BCE Inc has no effect on the direction of Academy Sports i.e., Academy Sports and BCE go up and down completely randomly.

Pair Corralation between Academy Sports and BCE

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the BCE. In addition to that, Academy Sports is 6.59 times more volatile than BCE Inc. It trades about -0.11 of its total potential returns per unit of risk. BCE Inc is currently generating about 0.13 per unit of volatility. If you would invest  1,069  in BCE Inc on December 19, 2024 and sell it today you would earn a total of  31.00  from holding BCE Inc or generate 2.9% return on investment over 90 days.

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

Academy Sports Outdoors  vs.  BCE Inc

Academy Sports Outdoors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Academy Sports Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BCE Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BCE Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BCE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Academy Sports and BCE

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

The idea behind Academy Sports Outdoors and BCE Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..