Correlation Between Academy Sports and Sea
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Sea 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 Sea 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 Sea, you can compare the effects of market volatilities on Academy Sports and Sea 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 Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Sea.
Diversification Opportunities for Academy Sports and Sea
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Academy and Sea is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea 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 Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Academy Sports i.e., Academy Sports and Sea go up and down completely randomly.
Pair Corralation between Academy Sports and Sea
Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Sea. But the stock apears to be less risky and, when comparing its historical volatility, Academy Sports Outdoors is 1.01 times less risky than Sea. The stock trades about -0.22 of its potential returns per unit of risk. The Sea is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 11,423 in Sea on November 27, 2024 and sell it today you would earn a total of 1,296 from holding Sea or generate 11.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Sea
Performance |
| Timeline |
| Academy Sports Outdoors |
| Sea |
Academy Sports and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Sea
The main advantage of trading using opposite Academy Sports and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
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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