Correlation Between Academy Sports and SNDL
Can any of the company-specific risk be diversified away by investing in both Academy Sports and SNDL 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 SNDL 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 SNDL Inc, you can compare the effects of market volatilities on Academy Sports and SNDL 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 SNDL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and SNDL.
Diversification Opportunities for Academy Sports and SNDL
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Academy and SNDL is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and SNDL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SNDL 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 SNDL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SNDL Inc has no effect on the direction of Academy Sports i.e., Academy Sports and SNDL go up and down completely randomly.
Pair Corralation between Academy Sports and SNDL
Considering the 90-day investment horizon Academy Sports is expected to generate 4.44 times less return on investment than SNDL. But when comparing it to its historical volatility, Academy Sports Outdoors is 1.72 times less risky than SNDL. It trades about 0.01 of its potential returns per unit of risk. SNDL Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 203.00 in SNDL Inc on November 2, 2024 and sell it today you would lose (25.00) from holding SNDL Inc or give up 12.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. SNDL Inc
Performance |
| Timeline |
| Academy Sports Outdoors |
| SNDL Inc |
Academy Sports and SNDL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and SNDL
The main advantage of trading using opposite Academy Sports and SNDL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, SNDL 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 SNDL will offset losses from the drop in SNDL'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 CEOs Directory module to screen CEOs from public companies around the world.
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