Correlation Between Academy Sports and Land Securities

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

Diversification Opportunities for Academy Sports and Land Securities

0.21

Correlation Coefficient

Academy Sports  Land Securities

Modest diversification

The 3 months correlation between Academy and Land is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Land Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land Securities Group 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 Land Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land Securities Group has no effect on the direction of Academy Sports i.e., Academy Sports and Land Securities go up and down completely randomly.

Pair Corralation between Academy Sports and Land Securities

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Land Securities. In addition to that, Academy Sports is 1.02 times more volatile than Land Securities Group. It trades about -0.03 of its total potential returns per unit of risk. Land Securities Group is currently generating about 0.0 per unit of volatility. If you would invest  760.00  in Land Securities Group on October 7, 2024 and sell it today you would lose (39.00) from holding Land Securities Group or give up 5.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.02%
Values	Daily Returns

Academy Sports Outdoors  vs.  Land Securities Group

Academy Sports Outdoors

Risk-Adjusted Performance

3 of 100

Weak

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 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.

Land Securities Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Academy Sports and Land Securities

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

The idea behind Academy Sports Outdoors and Land Securities Group 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.