Correlation Between Weyco and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Weyco 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 Weyco and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weyco Group and Academy Sports Outdoors, you can compare the effects of market volatilities on Weyco 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 Weyco with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weyco and Academy Sports.
Diversification Opportunities for Weyco and Academy Sports
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Weyco and Academy is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Weyco Group 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 Weyco 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 Weyco Group 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 Weyco i.e., Weyco and Academy Sports go up and down completely randomly.
Pair Corralation between Weyco and Academy Sports
Given the investment horizon of 90 days Weyco Group is expected to generate 1.2 times more return on investment than Academy Sports. However, Weyco is 1.2 times more volatile than Academy Sports Outdoors. It trades about 0.06 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.04 per unit of risk. If you would invest 3,075 in Weyco Group on August 28, 2024 and sell it today you would earn a total of 543.00 from holding Weyco Group or generate 17.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weyco Group vs. Academy Sports Outdoors
Performance |
| Timeline |
| Weyco Group |
| Academy Sports Outdoors |
Weyco and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weyco and Academy Sports
The main advantage of trading using opposite Weyco and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weyco 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 Weyco Group 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. 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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