Correlation Between Academy Sports and Holley
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Holley 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 Holley 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 Holley Inc, you can compare the effects of market volatilities on Academy Sports and Holley 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 Holley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Holley.
Diversification Opportunities for Academy Sports and Holley
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Academy and Holley is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Holley Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holley 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 Holley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holley Inc has no effect on the direction of Academy Sports i.e., Academy Sports and Holley go up and down completely randomly.
Pair Corralation between Academy Sports and Holley
Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Holley. But the stock apears to be less risky and, when comparing its historical volatility, Academy Sports Outdoors is 1.17 times less risky than Holley. The stock trades about -0.11 of its potential returns per unit of risk. The Holley Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 276.00 in Holley Inc on August 30, 2024 and sell it today you would earn a total of 12.00 from holding Holley Inc or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Holley Inc
Performance |
| Timeline |
| Academy Sports Outdoors |
| Holley Inc |
Academy Sports and Holley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Holley
The main advantage of trading using opposite Academy Sports and Holley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Holley 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 Holley will offset losses from the drop in Holley's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| Holley vs. Dorman Products | Holley vs. Monro Muffler Brake | Holley vs. Standard Motor Products | Holley vs. Stoneridge |
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.
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