Correlation Between Lake Resources and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Lake Resources 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 Lake Resources and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lake Resources NL and Academy Sports Outdoors, you can compare the effects of market volatilities on Lake Resources 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 Lake Resources with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lake Resources and Academy Sports.
Diversification Opportunities for Lake Resources and Academy Sports
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lake and Academy is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lake Resources NL 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 Lake Resources 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 Lake Resources NL 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 Lake Resources i.e., Lake Resources and Academy Sports go up and down completely randomly.
Pair Corralation between Lake Resources and Academy Sports
Assuming the 90 days horizon Lake Resources NL is expected to generate 2.69 times more return on investment than Academy Sports. However, Lake Resources is 2.69 times more volatile than Academy Sports Outdoors. It trades about -0.02 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.14 per unit of risk. If you would invest 2.85 in Lake Resources NL on November 3, 2024 and sell it today you would lose (0.20) from holding Lake Resources NL or give up 7.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lake Resources NL vs. Academy Sports Outdoors
Performance |
| Timeline |
| Lake Resources NL |
| Academy Sports Outdoors |
Lake Resources and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lake Resources and Academy Sports
The main advantage of trading using opposite Lake Resources and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lake Resources 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.| Lake Resources vs. Ballys Corp | Lake Resources vs. RCI Hospitality Holdings | Lake Resources vs. RLJ Lodging Trust | Lake Resources vs. Summit Hotel Properties |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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