Correlation Between Academy Sports and Natura Co
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Natura Co 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 Academy Sports and Natura Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Academy Sports and and Natura Co Holding, you can compare the effects of market volatilities on Academy Sports and Natura Co 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 Academy Sports with a short position of Natura Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Natura Co.
Diversification Opportunities for Academy Sports and Natura Co
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Academy and Natura is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports and and Natura Co Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natura Co Holding and Academy Sports 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 Academy Sports and are associated (or correlated) with Natura Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natura Co Holding has no effect on the direction of Academy Sports i.e., Academy Sports and Natura Co go up and down completely randomly.
Pair Corralation between Academy Sports and Natura Co
Assuming the 90 days trading horizon Academy Sports and is expected to generate 0.14 times more return on investment than Natura Co. However, Academy Sports and is 7.38 times less risky than Natura Co. It trades about -0.27 of its potential returns per unit of risk. Natura Co Holding is currently generating about -0.13 per unit of risk. If you would invest 8,640 in Academy Sports and on October 22, 2024 and sell it today you would lose (104.00) from holding Academy Sports and or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 82.35% |
| Values | Daily Returns |
Academy Sports and vs. Natura Co Holding
Performance |
| Timeline |
| Academy Sports |
| Natura Co Holding |
Academy Sports and Natura Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Natura Co
The main advantage of trading using opposite Academy Sports and Natura Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Natura Co 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 Natura Co will offset losses from the drop in Natura Co's long position.| Academy Sports vs. Taiwan Semiconductor Manufacturing | Academy Sports vs. Apple Inc | Academy Sports vs. Alibaba Group Holding | Academy Sports vs. Microsoft |
| Natura Co vs. Academy Sports and | Natura Co vs. Air Products and | Natura Co vs. United States Steel | Natura Co vs. Hormel Foods |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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