Correlation Between Academy Sports and Pinnacle Foods

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

Diversification Opportunities for Academy Sports and Pinnacle Foods

0.0

Correlation Coefficient

Academy Sports  Pinnacle Foods

Pay attention - limited upside

The 3 months correlation between Academy and Pinnacle is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Pinnacle Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Foods 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 Pinnacle Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Foods has no effect on the direction of Academy Sports i.e., Academy Sports and Pinnacle Foods go up and down completely randomly.

Pair Corralation between Academy Sports and Pinnacle Foods

If you would invest (100.00) in Pinnacle Foods on December 3, 2024 and sell it today you would earn a total of  100.00  from holding Pinnacle Foods or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Academy Sports Outdoors  vs.  Pinnacle Foods

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 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.

Pinnacle Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pinnacle Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Pinnacle Foods is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Academy Sports and Pinnacle Foods

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

The idea behind Academy Sports Outdoors and Pinnacle Foods 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.