Correlation Between Academy Sports and Cencora

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

Diversification Opportunities for Academy Sports and Cencora

-0.77

Correlation Coefficient

Academy Sports  Cencora

Pay attention - limited upside

The 3 months correlation between Academy and Cencora is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Academy Sports i.e., Academy Sports and Cencora go up and down completely randomly.

Pair Corralation between Academy Sports and Cencora

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Cencora. In addition to that, Academy Sports is 2.14 times more volatile than Cencora. It trades about -0.11 of its total potential returns per unit of risk. Cencora is currently generating about 0.25 per unit of volatility. If you would invest  22,713  in Cencora on December 21, 2024 and sell it today you would earn a total of  4,071  from holding Cencora or generate 17.92% return on investment over 90 days.

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

Academy Sports Outdoors  vs.  Cencora

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.

Cencora

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Cencora reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Academy Sports and Cencora

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

The idea behind Academy Sports Outdoors and Cencora 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.