Correlation Between JBG SMITH and Academy Sports

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

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

Diversification Opportunities for JBG SMITH and Academy Sports

0.46

Correlation Coefficient

JBG SMITH  Academy Sports

Very weak diversification

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

Pair Corralation between JBG SMITH and Academy Sports

Given the investment horizon of 90 days JBG SMITH Properties is expected to under-perform the Academy Sports. In addition to that, JBG SMITH is 1.02 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 0.43 per unit of volatility. If you would invest  4,934  in Academy Sports Outdoors on September 26, 2024 and sell it today you would earn a total of  886.00  from holding Academy Sports Outdoors or generate 17.96% return on investment over 90 days.

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

JBG SMITH Properties  vs.  Academy Sports Outdoors

JBG SMITH Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JBG SMITH Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private 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 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 JBG SMITH and Academy Sports

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

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.