Correlation Between Transportadora and Academy Sports

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

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

Diversification Opportunities for Transportadora and Academy Sports

-0.63

Correlation Coefficient

Transportadora  Academy Sports

Excellent diversification

The 3 months correlation between Transportadora and Academy is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas 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 Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Academy Sports go up and down completely randomly.

Pair Corralation between Transportadora and Academy Sports

Considering the 90-day investment horizon Transportadora de Gas is expected to under-perform the Academy Sports. In addition to that, Transportadora is 1.21 times more volatile than Academy Sports Outdoors. It trades about -0.09 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.33 per unit of volatility. If you would invest  4,934  in Academy Sports Outdoors on September 24, 2024 and sell it today you would earn a total of  630.00  from holding Academy Sports Outdoors or generate 12.77% return on investment over 90 days.

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

Transportadora de Gas  vs.  Academy Sports Outdoors

Transportadora de Gas

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating 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.

Pair Trading with Transportadora and Academy Sports

The main advantage of trading using opposite Transportadora and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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 Transportadora de Gas 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.