Correlation Between Fluent and Academy Sports

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

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

Diversification Opportunities for Fluent and Academy Sports

0.46

Correlation Coefficient

Fluent  Academy Sports

Very weak diversification

The 3 months correlation between Fluent and Academy is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc 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 Fluent 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 Fluent Inc 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 Fluent i.e., Fluent and Academy Sports go up and down completely randomly.

Pair Corralation between Fluent and Academy Sports

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Academy Sports. In addition to that, Fluent is 1.6 times more volatile than Academy Sports Outdoors. It trades about -0.06 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.61 per unit of volatility. If you would invest  4,792  in Academy Sports Outdoors on September 27, 2024 and sell it today you would earn a total of  1,325  from holding Academy Sports Outdoors or generate 27.65% return on investment over 90 days.

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

Fluent Inc  vs.  Academy Sports Outdoors

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fluent Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Academy Sports Outdoors

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Academy Sports is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fluent and Academy Sports

The main advantage of trading using opposite Fluent and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluent 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 Fluent Inc 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.