Correlation Between Academy Sports and Big 5

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Can any of the company-specific risk be diversified away by investing in both Academy Sports and Big 5 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 Academy Sports and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Academy Sports And and Big 5 Sporting, you can compare the effects of market volatilities on Academy Sports and Big 5 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 Academy Sports with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Big 5.

Diversification Opportunities for Academy Sports and Big 5

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Academy and Big 5 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports And and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and Academy Sports 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 Academy Sports And are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Academy Sports i.e., Academy Sports and Big 5 go up and down completely randomly.

Pair Corralation between Academy Sports and Big 5

Considering the 90-day investment horizon Academy Sports And is expected to generate 0.5 times more return on investment than Big 5. However, Academy Sports And is 2.01 times less risky than Big 5. It trades about 0.26 of its potential returns per unit of risk. Big 5 Sporting is currently generating about 0.04 per unit of risk. If you would invest  3,739  in Academy Sports And on May 12, 2022 and sell it today you would earn a total of  626.00  from holding Academy Sports And or generate 16.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Academy Sports And  vs.  Big 5 Sporting

 Performance (%) 
       Timeline  
Academy Sports And 
Academy Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports And are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Academy Sports disclosed solid returns over the last few months and may actually be approaching a breakup point.

Academy Price Channel

Big 5 Sporting 
Big 5 Performance
0 of 100
Over the last 90 days Big 5 Sporting has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Big 5 is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Big 5 Price Channel

Academy Sports and Big 5 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Academy Sports and Big 5

The main advantage of trading using opposite Academy Sports and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.
The idea behind Academy Sports And and Big 5 Sporting 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.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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