Correlation Between Academy Sports and Genuine Parts

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Can any of the company-specific risk be diversified away by investing in both Academy Sports and Genuine Parts 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 Genuine Parts 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 Genuine Parts, you can compare the effects of market volatilities on Academy Sports and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Genuine Parts.

Diversification Opportunities for Academy Sports and Genuine Parts

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Academy and Genuine is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports And and Genuine Parts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Academy Sports i.e., Academy Sports and Genuine Parts go up and down completely randomly.

Pair Corralation between Academy Sports and Genuine Parts

Considering the 90-day investment horizon Academy Sports And is expected to generate 2.08 times more return on investment than Genuine Parts. However, Academy Sports is 2.08 times more volatile than Genuine Parts. It trades about 0.09 of its potential returns per unit of risk. Genuine Parts is currently generating about 0.07 per unit of risk. If you would invest  1,293  in Academy Sports And on April 3, 2022 and sell it today you would earn a total of  2,206  from holding Academy Sports And or generate 170.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy88.38%
ValuesDaily Returns

Academy Sports And  vs.  Genuine Parts

 Performance (%) 
      Timeline 
Academy Sports And 
Academy Performance
0 of 100
Over the last 90 days Academy Sports And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Academy Sports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0084
Payout Ratio
0.0202
Forward Annual Dividend Rate
0.3
Dividend Date
2022-07-14
Ex Dividend Date
2022-06-15

Academy Price Channel

Genuine Parts 
Genuine Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Genuine Parts is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0269
Payout Ratio
0.47
Last Split Factor
3:2
Forward Annual Dividend Rate
3.58
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-02
Last Split Date
1997-04-15

Genuine Price Channel

Academy Sports and Genuine Parts Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Academy Sports and Genuine Parts

The main advantage of trading using opposite Academy Sports and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' long position.
The idea behind Academy Sports And and Genuine Parts 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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