Correlation Between Good Life and Academy Sports

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

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

Diversification Opportunities for Good Life and Academy Sports

0.0

Correlation Coefficient

Good Life  Academy Sports

Pay attention - limited upside

The 3 months correlation between Good and Academy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Good Life China 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 Good Life 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 Good Life China 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 Good Life i.e., Good Life and Academy Sports go up and down completely randomly.

Pair Corralation between Good Life and Academy Sports

If you would invest  0.00  in Good Life China on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Good Life China or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Good Life China  vs.  Academy Sports Outdoors

Good Life China

Risk-Adjusted Performance

Very Weak

Over the last 90 days Good Life China has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Good Life is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with Good Life and Academy Sports

The main advantage of trading using opposite Good Life and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Good Life 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 Good Life China 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.