Correlation Between Academy Sports and Evertz Technologies

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

Diversification Opportunities for Academy Sports and Evertz Technologies

-0.13

Correlation Coefficient

Academy Sports  Evertz Technologies

Good diversification

The 3 months correlation between Academy and Evertz is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Academy Sports i.e., Academy Sports and Evertz Technologies go up and down completely randomly.

Pair Corralation between Academy Sports and Evertz Technologies

Considering the 90-day investment horizon Academy Sports is expected to generate 1.31 times less return on investment than Evertz Technologies. But when comparing it to its historical volatility, Academy Sports Outdoors is 1.89 times less risky than Evertz Technologies. It trades about 0.03 of its potential returns per unit of risk. Evertz Technologies Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  910.00  in Evertz Technologies Limited on September 27, 2024 and sell it today you would lose (66.00) from holding Evertz Technologies Limited or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.23%
Values	Daily Returns

Academy Sports Outdoors  vs.  Evertz Technologies Limited

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.

Evertz Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evertz Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Evertz Technologies 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 Evertz Technologies

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

The idea behind Academy Sports Outdoors and Evertz Technologies Limited 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.