Correlation Between Academy Sports and United Airlines
Can any of the company-specific risk be diversified away by investing in both Academy Sports and United Airlines 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 United Airlines 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 United Airlines Holdings, you can compare the effects of market volatilities on Academy Sports and United Airlines 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 United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and United Airlines.
Diversification Opportunities for Academy Sports and United Airlines
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Academy and United is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports and and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings 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 United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Academy Sports i.e., Academy Sports and United Airlines go up and down completely randomly.
Pair Corralation between Academy Sports and United Airlines
Assuming the 90 days trading horizon Academy Sports and is expected to under-perform the United Airlines. In addition to that, Academy Sports is 1.07 times more volatile than United Airlines Holdings. It trades about -0.26 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.04 per unit of volatility. If you would invest 30,858 in United Airlines Holdings on November 8, 2024 and sell it today you would earn a total of 503.00 from holding United Airlines Holdings or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports and vs. United Airlines Holdings
Performance |
| Timeline |
| Academy Sports |
| United Airlines Holdings |
Academy Sports and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and United Airlines
The main advantage of trading using opposite Academy Sports and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, United Airlines 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 United Airlines will offset losses from the drop in United Airlines' long position.| Academy Sports vs. Taiwan Semiconductor Manufacturing | Academy Sports vs. Apple Inc | Academy Sports vs. Alibaba Group Holding | Academy Sports vs. Microsoft |
| United Airlines vs. Patria Investments Limited | United Airlines vs. Akamai Technologies, | United Airlines vs. Clover Health Investments, | United Airlines vs. DXC Technology |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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