Correlation Between Academy Sports and Hour Loop
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Hour Loop 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 Hour Loop 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 Hour Loop, you can compare the effects of market volatilities on Academy Sports and Hour Loop 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 Hour Loop. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Hour Loop.
Diversification Opportunities for Academy Sports and Hour Loop
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Academy and Hour is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Hour Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hour Loop 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 Hour Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hour Loop has no effect on the direction of Academy Sports i.e., Academy Sports and Hour Loop go up and down completely randomly.
Pair Corralation between Academy Sports and Hour Loop
Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.5 times more return on investment than Hour Loop. However, Academy Sports Outdoors is 1.99 times less risky than Hour Loop. It trades about 0.01 of its potential returns per unit of risk. Hour Loop is currently generating about -0.01 per unit of risk. If you would invest 4,864 in Academy Sports Outdoors on August 27, 2024 and sell it today you would lose (200.00) from holding Academy Sports Outdoors or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Hour Loop
Performance |
| Timeline |
| Academy Sports Outdoors |
| Hour Loop |
Academy Sports and Hour Loop Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Hour Loop
The main advantage of trading using opposite Academy Sports and Hour Loop positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Hour Loop 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 Hour Loop will offset losses from the drop in Hour Loop's long position.| Academy Sports vs. Oriental Culture Holding | Academy Sports vs. Hour Loop | Academy Sports vs. Qurate Retail Series | Academy Sports vs. Emerge Commerce |
| Hour Loop vs. Qurate Retail Series | Hour Loop vs. iPower Inc | Hour Loop vs. MOGU Inc | Hour Loop vs. Qurate Retail |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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