Correlation Between Academy Sports and Nexstar Broadcasting

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

Diversification Opportunities for Academy Sports and Nexstar Broadcasting

-0.48

Correlation Coefficient

Academy Sports  Nexstar Broadcasting

Very good diversification

The 3 months correlation between Academy and Nexstar is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Nexstar Broadcasting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Broadcasting 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 Nexstar Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Broadcasting has no effect on the direction of Academy Sports i.e., Academy Sports and Nexstar Broadcasting go up and down completely randomly.

Pair Corralation between Academy Sports and Nexstar Broadcasting

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 1.78 times more return on investment than Nexstar Broadcasting. However, Academy Sports is 1.78 times more volatile than Nexstar Broadcasting Group. It trades about 0.12 of its potential returns per unit of risk. Nexstar Broadcasting Group is currently generating about -0.01 per unit of risk. If you would invest  5,128  in Academy Sports Outdoors on October 9, 2024 and sell it today you would earn a total of  532.00  from holding Academy Sports Outdoors or generate 10.37% 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.  Nexstar Broadcasting Group

Academy Sports Outdoors

Risk-Adjusted Performance

3 of 100

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 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.

Nexstar Broadcasting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexstar Broadcasting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nexstar Broadcasting is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Academy Sports and Nexstar Broadcasting

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

The idea behind Academy Sports Outdoors and Nexstar Broadcasting 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.