Correlation Between Academy Sports and Gen Digital
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Gen Digital 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 Gen Digital 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 Gen Digital, you can compare the effects of market volatilities on Academy Sports and Gen Digital 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 Gen Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Gen Digital.
Diversification Opportunities for Academy Sports and Gen Digital
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Academy and Gen is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports and and Gen Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gen Digital 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 Gen Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gen Digital has no effect on the direction of Academy Sports i.e., Academy Sports and Gen Digital go up and down completely randomly.
Pair Corralation between Academy Sports and Gen Digital
Assuming the 90 days trading horizon Academy Sports and is expected to generate 0.45 times more return on investment than Gen Digital. However, Academy Sports and is 2.24 times less risky than Gen Digital. It trades about -0.34 of its potential returns per unit of risk. Gen Digital is currently generating about -0.21 per unit of risk. If you would invest 8,640 in Academy Sports and on November 3, 2024 and sell it today you would lose (248.00) from holding Academy Sports and or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Academy Sports and vs. Gen Digital
Performance |
| Timeline |
| Academy Sports |
| Gen Digital |
Academy Sports and Gen Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Gen Digital
The main advantage of trading using opposite Academy Sports and Gen Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Gen Digital 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 Gen Digital will offset losses from the drop in Gen Digital'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 |
| Gen Digital vs. United Rentals | Gen Digital vs. Monster Beverage | Gen Digital vs. Ryanair Holdings plc | Gen Digital vs. Live Nation Entertainment, |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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