Correlation Between Hudson Pacific and Academy Sports

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Can any of the company-specific risk be diversified away by investing in both Hudson Pacific 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 Hudson Pacific and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Pacific Properties and Academy Sports Outdoors, you can compare the effects of market volatilities on Hudson Pacific 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 Hudson Pacific with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and Academy Sports.

Diversification Opportunities for Hudson Pacific and Academy Sports

HudsonAcademyDiversified AwayHudsonAcademyDiversified Away100%
0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hudson and Academy is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties 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 Hudson Pacific 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 Hudson Pacific Properties 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 Hudson Pacific i.e., Hudson Pacific and Academy Sports go up and down completely randomly.

Pair Corralation between Hudson Pacific and Academy Sports

Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Academy Sports. In addition to that, Hudson Pacific is 1.77 times more volatile than Academy Sports Outdoors. It trades about -0.16 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.05 per unit of volatility. If you would invest  5,937  in Academy Sports Outdoors on September 15, 2024 and sell it today you would lose (506.00) from holding Academy Sports Outdoors or give up 8.52% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hudson Pacific Properties  vs.  Academy Sports Outdoors

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -30-20-10010
JavaScript chart by amCharts 3.21.15HPP ASO
       Timeline  
Hudson Pacific Properties 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hudson Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec33.544.555.5
Academy Sports Outdoors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4550556065

Hudson Pacific and Academy Sports Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.48-4.85-3.23-1.6-0.021.382.84.225.647.06 0.030.040.050.060.07
JavaScript chart by amCharts 3.21.15HPP ASO
       Returns  

Pair Trading with Hudson Pacific and Academy Sports

The main advantage of trading using opposite Hudson Pacific and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific 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 Hudson Pacific Properties 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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