Correlation Between Academy Sports and Spring Valley
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Spring Valley 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 Spring Valley 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 Spring Valley Acquisition, you can compare the effects of market volatilities on Academy Sports and Spring Valley 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 Spring Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Spring Valley.
Diversification Opportunities for Academy Sports and Spring Valley
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Academy and Spring is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Academy Sports i.e., Academy Sports and Spring Valley go up and down completely randomly.
Pair Corralation between Academy Sports and Spring Valley
Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 3.62 times more return on investment than Spring Valley. However, Academy Sports is 3.62 times more volatile than Spring Valley Acquisition. It trades about 0.01 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.03 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. Spring Valley Acquisition
Performance |
| Timeline |
| Academy Sports Outdoors |
| Spring Valley Acquisition |
Academy Sports and Spring Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Spring Valley
The main advantage of trading using opposite Academy Sports and Spring Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Spring Valley 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 Spring Valley will offset losses from the drop in Spring Valley's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
| Spring Valley vs. Ultra Clean Holdings | Spring Valley vs. Stepan Company | Spring Valley vs. Gentex | Spring Valley vs. Academy Sports Outdoors |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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