Correlation Between Academy Sports and SES AI
Can any of the company-specific risk be diversified away by investing in both Academy Sports and SES AI 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 SES AI 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 SES AI Corp, you can compare the effects of market volatilities on Academy Sports and SES AI 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 SES AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and SES AI.
Diversification Opportunities for Academy Sports and SES AI
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Academy and SES is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and SES AI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SES AI Corp 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 SES AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SES AI Corp has no effect on the direction of Academy Sports i.e., Academy Sports and SES AI go up and down completely randomly.
Pair Corralation between Academy Sports and SES AI
Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 0.34 times more return on investment than SES AI. However, Academy Sports Outdoors is 2.96 times less risky than SES AI. It trades about -0.07 of its potential returns per unit of risk. SES AI Corp is currently generating about -0.24 per unit of risk. If you would invest 5,466 in Academy Sports Outdoors on August 31, 2024 and sell it today you would lose (581.00) from holding Academy Sports Outdoors or give up 10.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. SES AI Corp
Performance |
| Timeline |
| Academy Sports Outdoors |
| SES AI Corp |
Academy Sports and SES AI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and SES AI
The main advantage of trading using opposite Academy Sports and SES AI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, SES AI 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 SES AI will offset losses from the drop in SES AI's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI vs. Stoneridge |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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