Correlation Between Academy Sports and Mcig

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

Diversification Opportunities for Academy Sports and Mcig

0.17

Correlation Coefficient

Academy Sports  Mcig

Average diversification

The 3 months correlation between Academy and Mcig is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Mcig Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mcig 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 Mcig. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mcig Inc has no effect on the direction of Academy Sports i.e., Academy Sports and Mcig go up and down completely randomly.

Pair Corralation between Academy Sports and Mcig

Considering the 90-day investment horizon Academy Sports is expected to generate 32.58 times less return on investment than Mcig. But when comparing it to its historical volatility, Academy Sports Outdoors is 11.81 times less risky than Mcig. It trades about 0.05 of its potential returns per unit of risk. Mcig Inc is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.33  in Mcig Inc on October 25, 2024 and sell it today you would earn a total of  0.47  from holding Mcig Inc or generate 142.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Academy Sports Outdoors  vs.  Mcig Inc

Academy Sports Outdoors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mcig Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mcig Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Mcig demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Academy Sports and Mcig

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

The idea behind Academy Sports Outdoors and Mcig 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.