Correlation Between Academy Sports and Prudential Financial
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Prudential Financial 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 Prudential Financial 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 Prudential Financial, you can compare the effects of market volatilities on Academy Sports and Prudential Financial 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 Prudential Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Prudential Financial.
Diversification Opportunities for Academy Sports and Prudential Financial
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Academy and Prudential is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports and and Prudential Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Financial 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 Prudential Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Financial has no effect on the direction of Academy Sports i.e., Academy Sports and Prudential Financial go up and down completely randomly.
Pair Corralation between Academy Sports and Prudential Financial
Assuming the 90 days trading horizon Academy Sports and is expected to under-perform the Prudential Financial. In addition to that, Academy Sports is 1.04 times more volatile than Prudential Financial. It trades about -0.34 of its total potential returns per unit of risk. Prudential Financial is currently generating about -0.06 per unit of volatility. If you would invest 36,519 in Prudential Financial on November 3, 2024 and sell it today you would lose (224.00) from holding Prudential Financial or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.26% |
| Values | Daily Returns |
Academy Sports and vs. Prudential Financial
Performance |
| Timeline |
| Academy Sports |
| Prudential Financial |
Academy Sports and Prudential Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Prudential Financial
The main advantage of trading using opposite Academy Sports and Prudential Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Prudential Financial 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 Prudential Financial will offset losses from the drop in Prudential Financial's long position.| Academy Sports vs. Spotify Technology SA | Academy Sports vs. KB Financial Group | Academy Sports vs. Prudential Financial | Academy Sports vs. Deutsche Bank Aktiengesellschaft |
| Prudential Financial vs. Pure Storage, | Prudential Financial vs. Zoom Video Communications | Prudential Financial vs. Electronic Arts | Prudential Financial vs. Warner Music Group |
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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