Correlation Between Academy Sports and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Whirlpool 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 Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on Academy Sports and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Whirlpool.
Diversification Opportunities for Academy Sports and Whirlpool
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Academy and Whirlpool is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Academy Sports i.e., Academy Sports and Whirlpool go up and down completely randomly.
Pair Corralation between Academy Sports and Whirlpool
Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Whirlpool. In addition to that, Academy Sports is 1.44 times more volatile than Whirlpool. It trades about -0.11 of its total potential returns per unit of risk. Whirlpool is currently generating about 0.44 per unit of volatility. If you would invest 10,212 in Whirlpool on August 28, 2024 and sell it today you would earn a total of 1,588 from holding Whirlpool or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Whirlpool
Performance |
| Timeline |
| Academy Sports Outdoors |
| Whirlpool |
Academy Sports and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Whirlpool
The main advantage of trading using opposite Academy Sports and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.| Academy Sports vs. Oriental Culture Holding | Academy Sports vs. Hour Loop | Academy Sports vs. Qurate Retail Series | Academy Sports vs. Emerge Commerce |
| Whirlpool vs. Ethan Allen Interiors | Whirlpool vs. Mohawk Industries | Whirlpool vs. Tempur Sealy International | Whirlpool vs. MillerKnoll |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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