Correlation Between Warby Parker and Academy Sports
Can any of the company-specific risk be diversified away by investing in both Warby Parker 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 Warby Parker and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warby Parker and Academy Sports Outdoors, you can compare the effects of market volatilities on Warby Parker 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 Warby Parker with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warby Parker and Academy Sports.
Diversification Opportunities for Warby Parker and Academy Sports
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Warby and Academy is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Warby Parker 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 Warby Parker 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 Warby Parker 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 Warby Parker i.e., Warby Parker and Academy Sports go up and down completely randomly.
Pair Corralation between Warby Parker and Academy Sports
Given the investment horizon of 90 days Warby Parker is expected to generate 1.45 times more return on investment than Academy Sports. However, Warby Parker is 1.45 times more volatile than Academy Sports Outdoors. It trades about 0.03 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.17 per unit of risk. If you would invest 2,421 in Warby Parker on November 30, 2024 and sell it today you would earn a total of 55.00 from holding Warby Parker or generate 2.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warby Parker vs. Academy Sports Outdoors
Performance |
| Timeline |
| Warby Parker |
| Academy Sports Outdoors |
Warby Parker and Academy Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warby Parker and Academy Sports
The main advantage of trading using opposite Warby Parker and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warby Parker 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.| Warby Parker vs. Alcon AG | Warby Parker vs. The Cooper Companies, | Warby Parker vs. AngioDynamics | Warby Parker vs. AptarGroup |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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