Correlation Between Cedar Realty and Academy Sports

Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Academy Sports 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 Cedar Realty and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cedar Realty Trust and Academy Sports Outdoors, you can compare the effects of market volatilities on Cedar Realty and Academy Sports 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 Cedar Realty with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Academy Sports.

Diversification Opportunities for Cedar Realty and Academy Sports

-0.41

Correlation Coefficient

Cedar Realty  Academy Sports

Very good diversification

The 3 months correlation between Cedar and Academy is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Cedar Realty i.e., Cedar Realty and Academy Sports go up and down completely randomly.

Pair Corralation between Cedar Realty and Academy Sports

Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 1.2 times more return on investment than Academy Sports. However, Cedar Realty is 1.2 times more volatile than Academy Sports Outdoors. It trades about 0.03 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.02 per unit of risk. If you would invest  1,118  in Cedar Realty Trust on September 21, 2024 and sell it today you would earn a total of  341.00  from holding Cedar Realty Trust or generate 30.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cedar Realty Trust  vs.  Academy Sports Outdoors

Cedar Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cedar Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

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 inconsistent 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.

Pair Trading with Cedar Realty and Academy Sports

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

The idea behind Cedar Realty Trust and Academy Sports Outdoors 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.