Correlation Between Academy Sports and NetMed
Can any of the company-specific risk be diversified away by investing in both Academy Sports and NetMed 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 NetMed 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 NetMed Inc, you can compare the effects of market volatilities on Academy Sports and NetMed 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 NetMed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and NetMed.
Diversification Opportunities for Academy Sports and NetMed
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Academy and NetMed is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and NetMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetMed 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 NetMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetMed Inc has no effect on the direction of Academy Sports i.e., Academy Sports and NetMed go up and down completely randomly.
Pair Corralation between Academy Sports and NetMed
Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.15 times more return on investment than NetMed. However, Academy Sports Outdoors is 6.67 times less risky than NetMed. It trades about 0.0 of its potential returns per unit of risk. NetMed Inc is currently generating about -0.16 per unit of risk. If you would invest 5,410 in Academy Sports Outdoors on September 3, 2024 and sell it today you would lose (485.00) from holding Academy Sports Outdoors or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 8.08% |
| Values | Daily Returns |
Academy Sports Outdoors vs. NetMed Inc
Performance |
| Timeline |
| Academy Sports Outdoors |
| NetMed Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Academy Sports and NetMed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and NetMed
The main advantage of trading using opposite Academy Sports and NetMed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, NetMed 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 NetMed will offset losses from the drop in NetMed's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| NetMed vs. Iridium Communications | NetMed vs. Sphere Entertainment Co | NetMed vs. Zhihu Inc ADR | NetMed vs. NetEase |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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