Correlation Between Academy Sports and 8426EPAD0

Can any of the company-specific risk be diversified away by investing in both Academy Sports and 8426EPAD0 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 8426EPAD0 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 US8426EPAD09, you can compare the effects of market volatilities on Academy Sports and 8426EPAD0 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 8426EPAD0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and 8426EPAD0.

Diversification Opportunities for Academy Sports and 8426EPAD0

0.06

Correlation Coefficient

Academy Sports  8426EPAD0

Significant diversification

The 3 months correlation between Academy and 8426EPAD0 is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and US8426EPAD09 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US8426EPAD09 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 8426EPAD0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US8426EPAD09 has no effect on the direction of Academy Sports i.e., Academy Sports and 8426EPAD0 go up and down completely randomly.

Pair Corralation between Academy Sports and 8426EPAD0

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the 8426EPAD0. In addition to that, Academy Sports is 3.12 times more volatile than US8426EPAD09. It trades about -0.12 of its total potential returns per unit of risk. US8426EPAD09 is currently generating about 0.05 per unit of volatility. If you would invest  8,217  in US8426EPAD09 on December 25, 2024 and sell it today you would earn a total of  166.00  from holding US8426EPAD09 or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Academy Sports Outdoors  vs.  US8426EPAD09

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.

US8426EPAD09

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US8426EPAD09 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, 8426EPAD0 is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Academy Sports and 8426EPAD0

The main advantage of trading using opposite Academy Sports and 8426EPAD0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, 8426EPAD0 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 8426EPAD0 will offset losses from the drop in 8426EPAD0's long position.

The idea behind Academy Sports Outdoors and US8426EPAD09 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.