Correlation Between SLR Investment and Academy Sports

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

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

Diversification Opportunities for SLR Investment and Academy Sports

-0.68

Correlation Coefficient

SLR Investment  Academy Sports

Excellent diversification

The 3 months correlation between SLR and Academy is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp 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 SLR Investment 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 SLR Investment Corp 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 SLR Investment i.e., SLR Investment and Academy Sports go up and down completely randomly.

Pair Corralation between SLR Investment and Academy Sports

Given the investment horizon of 90 days SLR Investment Corp is expected to generate 0.36 times more return on investment than Academy Sports. However, SLR Investment Corp is 2.77 times less risky than Academy Sports. It trades about 0.17 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.11 per unit of risk. If you would invest  1,563  in SLR Investment Corp on December 19, 2024 and sell it today you would earn a total of  141.00  from holding SLR Investment Corp or generate 9.02% return on investment over 90 days.

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

SLR Investment Corp  vs.  Academy Sports Outdoors

SLR Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 SLR Investment and Academy Sports

The main advantage of trading using opposite SLR Investment and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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 SLR Investment Corp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.