Correlation Between Academy Sports and United Parks

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

Diversification Opportunities for Academy Sports and United Parks

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Academy and United is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Academy Sports i.e., Academy Sports and United Parks go up and down completely randomly.

Pair Corralation between Academy Sports and United Parks

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the United Parks. In addition to that, Academy Sports is 1.04 times more volatile than United Parks Resorts. It trades about -0.01 of its total potential returns per unit of risk. United Parks Resorts is currently generating about 0.03 per unit of volatility. If you would invest  5,275  in United Parks Resorts on September 19, 2024 and sell it today you would earn a total of  460.00  from holding United Parks Resorts or generate 8.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Academy Sports Outdoors  vs.  United Parks Resorts

 Performance 
       Timeline  
Academy Sports Outdoors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
United Parks Resorts 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, United Parks may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Academy Sports and United Parks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Academy Sports and United Parks

The main advantage of trading using opposite Academy Sports and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.
The idea behind Academy Sports Outdoors and United Parks Resorts 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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