Correlation Between Academy Sports and Olympic Steel
Can any of the company-specific risk be diversified away by investing in both Academy Sports and Olympic Steel 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 Olympic Steel 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 Olympic Steel, you can compare the effects of market volatilities on Academy Sports and Olympic Steel 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 Olympic Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Olympic Steel.
Diversification Opportunities for Academy Sports and Olympic Steel
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Academy and Olympic is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Olympic Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olympic Steel 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 Olympic Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olympic Steel has no effect on the direction of Academy Sports i.e., Academy Sports and Olympic Steel go up and down completely randomly.
Pair Corralation between Academy Sports and Olympic Steel
Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Olympic Steel. In addition to that, Academy Sports is 1.32 times more volatile than Olympic Steel. It trades about -0.14 of its total potential returns per unit of risk. Olympic Steel is currently generating about 0.2 per unit of volatility. If you would invest 3,198 in Olympic Steel on November 3, 2024 and sell it today you would earn a total of 249.00 from holding Olympic Steel or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Academy Sports Outdoors vs. Olympic Steel
Performance |
| Timeline |
| Academy Sports Outdoors |
| Olympic Steel |
Academy Sports and Olympic Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Academy Sports and Olympic Steel
The main advantage of trading using opposite Academy Sports and Olympic Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Olympic Steel 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 Olympic Steel will offset losses from the drop in Olympic Steel's long position.| Academy Sports vs. Williams Sonoma | Academy Sports vs. AutoZone | Academy Sports vs. Ulta Beauty | Academy Sports vs. Best Buy Co |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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