Correlation Between Bt Brands and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Bt Brands and Academy Sports 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 Bt Brands and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bt Brands and Academy Sports Outdoors, you can compare the effects of market volatilities on Bt Brands and Academy Sports 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 Bt Brands with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bt Brands and Academy Sports.
Diversification Opportunities for Bt Brands and Academy Sports
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BTBD and Academy is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bt Brands and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and Bt Brands 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 Bt Brands are associated (or correlated) with Academy Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Academy Sports Outdoors has no effect on the direction of Bt Brands i.e., Bt Brands and Academy Sports go up and down completely randomly.
Pair Corralation between Bt Brands and Academy Sports
Given the investment horizon of 90 days Bt Brands is expected to generate 2.47 times more return on investment than Academy Sports. However, Bt Brands is 2.47 times more volatile than Academy Sports Outdoors. It trades about 0.03 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about 0.0 per unit of risk. If you would invest 174.00 in Bt Brands on November 4, 2024 and sell it today you would earn a total of 12.00 from holding Bt Brands or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bt Brands vs. Academy Sports Outdoors
Performance |
| Timeline |
| Bt Brands |
| Academy Sports Outdoors |
Bt Brands and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bt Brands and Academy Sports
The main advantage of trading using opposite Bt Brands and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bt Brands position performs unexpectedly, Academy Sports 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 Academy Sports will offset losses from the drop in Academy Sports' long position.| Bt Brands vs. Alsea SAB de | Bt Brands vs. Marstons PLC | Bt Brands vs. Bagger Daves Burger | Bt Brands vs. Marstons PLC |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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