Correlation Between Academy Sports and BOS Better

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

Diversification Opportunities for Academy Sports and BOS Better

-0.41

Correlation Coefficient

Academy Sports  BOS Better

Very good diversification

The 3 months correlation between Academy and BOS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and BOS Better Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOS Better Online 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 BOS Better. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOS Better Online has no effect on the direction of Academy Sports i.e., Academy Sports and BOS Better go up and down completely randomly.

Pair Corralation between Academy Sports and BOS Better

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 1.33 times more return on investment than BOS Better. However, Academy Sports is 1.33 times more volatile than BOS Better Online. It trades about 0.61 of its potential returns per unit of risk. BOS Better Online is currently generating about -0.08 per unit of risk. If you would invest  4,792  in Academy Sports Outdoors on September 27, 2024 and sell it today you would earn a total of  1,325  from holding Academy Sports Outdoors or generate 27.65% 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.  BOS Better Online

Academy Sports Outdoors

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Academy Sports is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BOS Better Online

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Academy Sports and BOS Better

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

The idea behind Academy Sports Outdoors and BOS Better Online 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.

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.