Correlation Between Academy Sports and Gap,

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

Diversification Opportunities for Academy Sports and Gap,

0.84

Correlation Coefficient

Academy Sports  Gap,

Very poor diversification

The 3 months correlation between Academy and Gap, is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and The Gap, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gap, 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 Gap,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gap, has no effect on the direction of Academy Sports i.e., Academy Sports and Gap, go up and down completely randomly.

Pair Corralation between Academy Sports and Gap,

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Gap,. But the stock apears to be less risky and, when comparing its historical volatility, Academy Sports Outdoors is 1.49 times less risky than Gap,. The stock trades about -0.11 of its potential returns per unit of risk. The The Gap, is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,340  in The Gap, on December 28, 2024 and sell it today you would lose (217.00) from holding The Gap, or give up 9.27% of portfolio value over 90 days.

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

Academy Sports Outdoors  vs.  The Gap,

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.

Gap,

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Gap, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Academy Sports and Gap,

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

The idea behind Academy Sports Outdoors and The Gap, 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.