Correlation Between INTEL and Academy Sports

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Can any of the company-specific risk be diversified away by investing in both INTEL 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 INTEL and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTEL PORATION and Academy Sports Outdoors, you can compare the effects of market volatilities on INTEL 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 INTEL with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTEL and Academy Sports.

Diversification Opportunities for INTEL and Academy Sports

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between INTEL and Academy is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding INTEL PORATION 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 INTEL 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 INTEL PORATION 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 INTEL i.e., INTEL and Academy Sports go up and down completely randomly.

Pair Corralation between INTEL and Academy Sports

Assuming the 90 days trading horizon INTEL PORATION is expected to generate 1.06 times more return on investment than Academy Sports. However, INTEL is 1.06 times more volatile than Academy Sports Outdoors. It trades about 0.14 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.1 per unit of risk. If you would invest  8,584  in INTEL PORATION on September 5, 2024 and sell it today you would earn a total of  840.00  from holding INTEL PORATION or generate 9.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy80.95%
ValuesDaily Returns

INTEL PORATION  vs.  Academy Sports Outdoors

 Performance 
       Timeline  
INTEL PORATION 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in INTEL PORATION are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, INTEL sustained solid returns over the last few months and may actually be approaching a breakup point.
Academy Sports Outdoors 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Academy Sports Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Academy Sports is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

INTEL and Academy Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INTEL and Academy Sports

The main advantage of trading using opposite INTEL and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTEL 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.
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The idea behind INTEL PORATION 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.
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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