Correlation Between Floor Decor and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Floor Decor 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 Floor Decor and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Floor Decor Holdings and Academy Sports Outdoors, you can compare the effects of market volatilities on Floor Decor 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 Floor Decor with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Floor Decor and Academy Sports.
Diversification Opportunities for Floor Decor and Academy Sports
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Floor and Academy is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Floor Decor Holdings 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 Floor Decor 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 Floor Decor Holdings 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 Floor Decor i.e., Floor Decor and Academy Sports go up and down completely randomly.
Pair Corralation between Floor Decor and Academy Sports
Considering the 90-day investment horizon Floor Decor Holdings is expected to generate 1.02 times more return on investment than Academy Sports. However, Floor Decor is 1.02 times more volatile than Academy Sports Outdoors. It trades about 0.01 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.01 per unit of risk. If you would invest 11,153 in Floor Decor Holdings on August 26, 2024 and sell it today you would earn a total of 47.00 from holding Floor Decor Holdings or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Floor Decor Holdings vs. Academy Sports Outdoors
Performance |
| Timeline |
| Floor Decor Holdings |
| Academy Sports Outdoors |
Floor Decor and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Floor Decor and Academy Sports
The main advantage of trading using opposite Floor Decor and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Floor Decor 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.| Floor Decor vs. Arhaus Inc | Floor Decor vs. Haverty Furniture Companies | Floor Decor vs. Kirklands | Floor Decor vs. Haverty Furniture Companies |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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