Correlation Between Academy Sports and Electronic Arts
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Electronic Arts 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 Electronic Arts 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 Electronic Arts, you can compare the effects of market volatilities on Academy Sports and Electronic Arts 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 Electronic Arts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Electronic Arts.
Diversification Opportunities for Academy Sports and Electronic Arts
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Academy and Electronic is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of Academy Sports i.e., Academy Sports and Electronic Arts go up and down completely randomly.
Pair Corralation between Academy Sports and Electronic Arts
Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Electronic Arts. In addition to that, Academy Sports is 1.67 times more volatile than Electronic Arts. It trades about -0.3 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.65 per unit of volatility. If you would invest 14,418 in Electronic Arts on August 27, 2024 and sell it today you would earn a total of 2,249 from holding Electronic Arts or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Electronic Arts
Performance |
| Timeline |
| Academy Sports Outdoors |
| Electronic Arts |
Academy Sports and Electronic Arts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Electronic Arts
The main advantage of trading using opposite Academy Sports and Electronic Arts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Electronic Arts 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 Electronic Arts will offset losses from the drop in Electronic Arts' long position.| Academy Sports vs. Oriental Culture Holding | Academy Sports vs. Hour Loop | Academy Sports vs. Qurate Retail Series | Academy Sports vs. Emerge Commerce |
| Electronic Arts vs. Playstudios | Electronic Arts vs. Talkspace | Electronic Arts vs. Katapult Holdings Equity | Electronic Arts vs. Aquagold International |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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