Correlation Between Academy Sports and Legal General
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Legal General 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 Legal General 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 Legal General Group, you can compare the effects of market volatilities on Academy Sports and Legal General 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 Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Legal General.
Diversification Opportunities for Academy Sports and Legal General
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Academy and Legal is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Legal General Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General Group 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 Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General Group has no effect on the direction of Academy Sports i.e., Academy Sports and Legal General go up and down completely randomly.
Pair Corralation between Academy Sports and Legal General
Considering the 90-day investment horizon Academy Sports is expected to generate 1.02 times less return on investment than Legal General. In addition to that, Academy Sports is 1.36 times more volatile than Legal General Group. It trades about 0.08 of its total potential returns per unit of risk. Legal General Group is currently generating about 0.12 per unit of volatility. If you would invest 1,432 in Legal General Group on September 12, 2024 and sell it today you would earn a total of 57.00 from holding Legal General Group or generate 3.98% 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. Legal General Group
Performance |
| Timeline |
| Academy Sports Outdoors |
| Legal General Group |
Academy Sports and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Legal General
The main advantage of trading using opposite Academy Sports and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| Legal General vs. Nuveen Global High | Legal General vs. New America High | Legal General vs. Brookfield Business Corp | Legal General vs. Elysee Development Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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