Correlation Between Academy Sports and Red Robin
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Red Robin 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 Red Robin 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 Red Robin Gourmet, you can compare the effects of market volatilities on Academy Sports and Red Robin 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 Red Robin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Red Robin.
Diversification Opportunities for Academy Sports and Red Robin
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Academy and Red is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Red Robin Gourmet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Robin Gourmet 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 Red Robin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Robin Gourmet has no effect on the direction of Academy Sports i.e., Academy Sports and Red Robin go up and down completely randomly.
Pair Corralation between Academy Sports and Red Robin
Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.58 times more return on investment than Red Robin. However, Academy Sports Outdoors is 1.73 times less risky than Red Robin. It trades about 0.01 of its potential returns per unit of risk. Red Robin Gourmet is currently generating about -0.04 per unit of risk. If you would invest 5,026 in Academy Sports Outdoors on August 31, 2024 and sell it today you would lose (101.00) from holding Academy Sports Outdoors or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Red Robin Gourmet
Performance |
| Timeline |
| Academy Sports Outdoors |
| Red Robin Gourmet |
Academy Sports and Red Robin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Red Robin
The main advantage of trading using opposite Academy Sports and Red Robin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Red Robin 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 Red Robin will offset losses from the drop in Red Robin's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| Red Robin vs. Dine Brands Global | Red Robin vs. Bloomin Brands | Red Robin vs. BJs Restaurants | Red Robin vs. The Cheesecake Factory |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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