Correlation Between United Guardian and Academy Sports
Can any of the company-specific risk be diversified away by investing in both United Guardian 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 United Guardian and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Guardian and Academy Sports Outdoors, you can compare the effects of market volatilities on United Guardian 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 United Guardian with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Guardian and Academy Sports.
Diversification Opportunities for United Guardian and Academy Sports
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Academy is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian 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 United Guardian 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 United Guardian 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 United Guardian i.e., United Guardian and Academy Sports go up and down completely randomly.
Pair Corralation between United Guardian and Academy Sports
Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Academy Sports. In addition to that, United Guardian is 1.62 times more volatile than Academy Sports Outdoors. It trades about -0.21 of its total potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.14 per unit of volatility. If you would invest 5,286 in Academy Sports Outdoors on December 10, 2024 and sell it today you would lose (230.00) from holding Academy Sports Outdoors or give up 4.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
United Guardian vs. Academy Sports Outdoors
Performance |
Timeline |
United Guardian |
Academy Sports Outdoors |
United Guardian and Academy Sports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with United Guardian and Academy Sports
The main advantage of trading using opposite United Guardian and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Guardian 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.United Guardian vs. Utah Medical Products | United Guardian vs. Union Bankshares | United Guardian vs. Unity Bancorp |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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