Correlation Between Global E and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Global E 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 Global E and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global E Online and Academy Sports Outdoors, you can compare the effects of market volatilities on Global E 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 Global E with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Academy Sports.
Diversification Opportunities for Global E and Academy Sports
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Academy is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online 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 Global E 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 Global E Online 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 Global E i.e., Global E and Academy Sports go up and down completely randomly.
Pair Corralation between Global E and Academy Sports
Given the investment horizon of 90 days Global E Online is expected to generate 1.35 times more return on investment than Academy Sports. However, Global E is 1.35 times more volatile than Academy Sports Outdoors. It trades about 0.47 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.05 per unit of risk. If you would invest 3,844 in Global E Online on September 1, 2024 and sell it today you would earn a total of 1,384 from holding Global E Online or generate 36.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global E Online vs. Academy Sports Outdoors
Performance |
| Timeline |
| Global E Online |
| Academy Sports Outdoors |
Global E and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global E and Academy Sports
The main advantage of trading using opposite Global E and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global E 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.The idea behind Global E Online and Academy Sports Outdoors pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Academy Sports vs. Alcon AG | Academy Sports vs. The Cooper Companies, | Academy Sports vs. AngioDynamics | Academy Sports vs. AptarGroup |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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