Correlation Between Academy Sports and MarineMax

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

Diversification Opportunities for Academy Sports and MarineMax

-0.53

Correlation Coefficient

Academy Sports  MarineMax

Excellent diversification

The 3 months correlation between Academy and MarineMax is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax 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 MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Academy Sports i.e., Academy Sports and MarineMax go up and down completely randomly.

Pair Corralation between Academy Sports and MarineMax

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.66 times more return on investment than MarineMax. However, Academy Sports Outdoors is 1.51 times less risky than MarineMax. It trades about 0.05 of its potential returns per unit of risk. MarineMax is currently generating about -0.08 per unit of risk. If you would invest  4,875  in Academy Sports Outdoors on November 27, 2024 and sell it today you would earn a total of  243.00  from holding Academy Sports Outdoors or generate 4.98% 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.  MarineMax

Academy Sports Outdoors

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 3 (%) 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 March 2025.

MarineMax

Risk-Adjusted Performance

Very Weak

Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Academy Sports and MarineMax

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

The idea behind Academy Sports Outdoors and MarineMax 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.