Correlation Between Academy Sports and Eastman Kodak

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

Diversification Opportunities for Academy Sports and Eastman Kodak

-0.22

Correlation Coefficient

Academy Sports  Eastman Kodak

Very good diversification

The 3 months correlation between Academy and Eastman is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Eastman Kodak Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Kodak 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 Eastman Kodak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Kodak has no effect on the direction of Academy Sports i.e., Academy Sports and Eastman Kodak go up and down completely randomly.

Pair Corralation between Academy Sports and Eastman Kodak

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.41 times more return on investment than Eastman Kodak. However, Academy Sports Outdoors is 2.47 times less risky than Eastman Kodak. It trades about 0.33 of its potential returns per unit of risk. Eastman Kodak Co is currently generating about 0.12 per unit of risk. If you would invest  4,934  in Academy Sports Outdoors on September 24, 2024 and sell it today you would earn a total of  630.00  from holding Academy Sports Outdoors or generate 12.77% return on investment over 90 days.

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

Academy Sports Outdoors  vs.  Eastman Kodak Co

Academy Sports Outdoors

Risk-Adjusted Performance

0 of 100

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Eastman Kodak

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastman Kodak Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Eastman Kodak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Academy Sports and Eastman Kodak

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

The idea behind Academy Sports Outdoors and Eastman Kodak Co 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.