Correlation Between Academy Sports and Funko
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Funko 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 Funko 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 Funko Inc, you can compare the effects of market volatilities on Academy Sports and Funko 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 Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Funko.
Diversification Opportunities for Academy Sports and Funko
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Academy and Funko is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko 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 Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Academy Sports i.e., Academy Sports and Funko go up and down completely randomly.
Pair Corralation between Academy Sports and Funko
Considering the 90-day investment horizon Academy Sports is expected to generate 1.93 times less return on investment than Funko. But when comparing it to its historical volatility, Academy Sports Outdoors is 1.1 times less risky than Funko. It trades about 0.14 of its potential returns per unit of risk. Funko Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,031 in Funko Inc on October 19, 2024 and sell it today you would earn a total of 286.00 from holding Funko Inc or generate 27.74% 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. Funko Inc
Performance |
| Timeline |
| Academy Sports Outdoors |
| Funko Inc |
Academy Sports and Funko Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Funko
The main advantage of trading using opposite Academy Sports and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Funko 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 Funko will offset losses from the drop in Funko's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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