Correlation Between Academy Sports and 50249AAD5

Can any of the company-specific risk be diversified away by investing in both Academy Sports and 50249AAD5 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 50249AAD5 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 LYB INTERNATIONAL FINANCE, you can compare the effects of market volatilities on Academy Sports and 50249AAD5 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 50249AAD5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and 50249AAD5.

Diversification Opportunities for Academy Sports and 50249AAD5

-0.31

Correlation Coefficient

Academy Sports  50249AAD5

Very good diversification

The 3 months correlation between Academy and 50249AAD5 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and LYB INTERNATIONAL FINANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTERNATIONAL FINANCE 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 50249AAD5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTERNATIONAL FINANCE has no effect on the direction of Academy Sports i.e., Academy Sports and 50249AAD5 go up and down completely randomly.

Pair Corralation between Academy Sports and 50249AAD5

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 1.36 times more return on investment than 50249AAD5. However, Academy Sports is 1.36 times more volatile than LYB INTERNATIONAL FINANCE. It trades about 0.05 of its potential returns per unit of risk. LYB INTERNATIONAL FINANCE is currently generating about 0.07 per unit of risk. If you would invest  5,224  in Academy Sports Outdoors on October 26, 2024 and sell it today you would earn a total of  322.00  from holding Academy Sports Outdoors or generate 6.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Academy Sports Outdoors  vs.  LYB INTERNATIONAL FINANCE

Academy Sports Outdoors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LYB INTERNATIONAL FINANCE

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LYB INTERNATIONAL FINANCE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 50249AAD5 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Academy Sports and 50249AAD5

The main advantage of trading using opposite Academy Sports and 50249AAD5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, 50249AAD5 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 50249AAD5 will offset losses from the drop in 50249AAD5's long position.

The idea behind Academy Sports Outdoors and LYB INTERNATIONAL FINANCE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.