Correlation Between Academy Sports and Seaport Entertainment

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

Diversification Opportunities for Academy Sports and Seaport Entertainment

-0.23

Correlation Coefficient

Academy Sports  Seaport Entertainment

Very good diversification

The 3 months correlation between Academy and Seaport is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Seaport Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seaport Entertainment 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 Seaport Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seaport Entertainment has no effect on the direction of Academy Sports i.e., Academy Sports and Seaport Entertainment go up and down completely randomly.

Pair Corralation between Academy Sports and Seaport Entertainment

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.62 times more return on investment than Seaport Entertainment. However, Academy Sports Outdoors is 1.6 times less risky than Seaport Entertainment. It trades about 0.18 of its potential returns per unit of risk. Seaport Entertainment Group is currently generating about -0.01 per unit of risk. If you would invest  5,000  in Academy Sports Outdoors on September 13, 2024 and sell it today you would earn a total of  452.00  from holding Academy Sports Outdoors or generate 9.04% 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.  Seaport Entertainment Group

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.

Seaport Entertainment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seaport Entertainment Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Seaport Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Academy Sports and Seaport Entertainment

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

The idea behind Academy Sports Outdoors and Seaport Entertainment 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.