Correlation Between Ispire Technology and Academy Sports

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

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

Diversification Opportunities for Ispire Technology and Academy Sports

0.71

Correlation Coefficient

Ispire Technology  Academy Sports

Poor diversification

The 3 months correlation between Ispire and Academy is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Ispire Technology Common 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 Ispire Technology 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 Ispire Technology Common 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 Ispire Technology i.e., Ispire Technology and Academy Sports go up and down completely randomly.

Pair Corralation between Ispire Technology and Academy Sports

Given the investment horizon of 90 days Ispire Technology Common is expected to under-perform the Academy Sports. In addition to that, Ispire Technology is 1.37 times more volatile than Academy Sports Outdoors. It trades about -0.27 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.12 per unit of volatility. If you would invest  5,989  in Academy Sports Outdoors on December 27, 2024 and sell it today you would lose (1,091) from holding Academy Sports Outdoors or give up 18.22% of portfolio value over 90 days.

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

Ispire Technology Common  vs.  Academy Sports Outdoors

Ispire Technology Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ispire Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 Ispire Technology and Academy Sports

The main advantage of trading using opposite Ispire Technology and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ispire Technology 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 Ispire Technology Common 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 Transaction History module to view history of all your transactions and understand their impact on performance.