Correlation Between Academy Sports and KINDER

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

Diversification Opportunities for Academy Sports and KINDER

-0.57

Correlation Coefficient

Academy Sports  KINDER

Excellent diversification

The 3 months correlation between Academy and KINDER is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and KINDER MORGAN ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINDER MORGAN ENERGY 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 KINDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINDER MORGAN ENERGY has no effect on the direction of Academy Sports i.e., Academy Sports and KINDER go up and down completely randomly.

Pair Corralation between Academy Sports and KINDER

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the KINDER. In addition to that, Academy Sports is 5.01 times more volatile than KINDER MORGAN ENERGY. It trades about -0.12 of its total potential returns per unit of risk. KINDER MORGAN ENERGY is currently generating about 0.01 per unit of volatility. If you would invest  10,068  in KINDER MORGAN ENERGY on December 23, 2024 and sell it today you would earn a total of  36.00  from holding KINDER MORGAN ENERGY or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Academy Sports Outdoors  vs.  KINDER MORGAN ENERGY

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

KINDER MORGAN ENERGY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KINDER MORGAN ENERGY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KINDER is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Academy Sports and KINDER

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

The idea behind Academy Sports Outdoors and KINDER MORGAN ENERGY 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.