Correlation Between Academy Sports and Arhaus
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Arhaus 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 Arhaus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Academy Sports Outdoors and Arhaus Inc, you can compare the effects of market volatilities on Academy Sports and Arhaus 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 Arhaus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Arhaus.
Diversification Opportunities for Academy Sports and Arhaus
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Academy and Arhaus is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Arhaus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arhaus Inc 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 Outdoors are associated (or correlated) with Arhaus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arhaus Inc has no effect on the direction of Academy Sports i.e., Academy Sports and Arhaus go up and down completely randomly.
Pair Corralation between Academy Sports and Arhaus
Considering the 90-day investment horizon Academy Sports is expected to generate 9.15 times less return on investment than Arhaus. But when comparing it to its historical volatility, Academy Sports Outdoors is 1.49 times less risky than Arhaus. It trades about 0.0 of its potential returns per unit of risk. Arhaus Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 924.00 in Arhaus Inc on August 30, 2024 and sell it today you would earn a total of 86.00 from holding Arhaus Inc or generate 9.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Arhaus Inc
Performance |
| Timeline |
| Academy Sports Outdoors |
| Arhaus Inc |
Academy Sports and Arhaus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Arhaus
The main advantage of trading using opposite Academy Sports and Arhaus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Arhaus 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 Arhaus will offset losses from the drop in Arhaus' long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| Arhaus vs. Purple Innovation | Arhaus vs. Mohawk Industries | Arhaus vs. La Z Boy Incorporated | Arhaus vs. Leggett Platt Incorporated |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |