Correlation Between Global Ship and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Ship 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 Ship Lease and Academy Sports Outdoors, you can compare the effects of market volatilities on Global Ship 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 Ship with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Academy Sports.
Diversification Opportunities for Global Ship and Academy Sports
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Academy is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease 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 Ship 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 Ship Lease 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 Ship i.e., Global Ship and Academy Sports go up and down completely randomly.
Pair Corralation between Global Ship and Academy Sports
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.28 times more return on investment than Academy Sports. However, Global Ship Lease is 3.52 times less risky than Academy Sports. It trades about 0.05 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.08 per unit of risk. If you would invest 2,617 in Global Ship Lease on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Global Ship Lease or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Academy Sports Outdoors
Performance |
| Timeline |
| Global Ship Lease |
| Academy Sports Outdoors |
Global Ship and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Academy Sports
The main advantage of trading using opposite Global Ship and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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