Correlation Between Safe and Academy Sports

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

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

Diversification Opportunities for Safe and Academy Sports

0.31

Correlation Coefficient

Safe  Academy Sports

Weak diversification

The 3 months correlation between Safe and Academy is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green 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 Safe 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 Safe and Green 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 Safe i.e., Safe and Academy Sports go up and down completely randomly.

Pair Corralation between Safe and Academy Sports

Considering the 90-day investment horizon Safe is expected to generate 1.51 times less return on investment than Academy Sports. In addition to that, Safe is 2.51 times more volatile than Academy Sports Outdoors. It trades about 0.08 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.31 per unit of volatility. If you would invest  5,031  in Academy Sports Outdoors on October 10, 2024 and sell it today you would earn a total of  726.00  from holding Academy Sports Outdoors or generate 14.43% return on investment over 90 days.

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

Safe and Green  vs.  Academy Sports Outdoors

Safe and Green

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe and Green has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Academy Sports Outdoors

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Safe and Academy Sports

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