Correlation Between Dicks Sporting and Academy Sports

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

Diversification Opportunities for Dicks Sporting and Academy Sports

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Dicks and Academy is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and Academy Sports And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports And and Dicks Sporting 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 Dicks Sporting Goods 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 And has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and Academy Sports go up and down completely randomly.

Pair Corralation between Dicks Sporting and Academy Sports

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.83 times more return on investment than Academy Sports. However, Dicks Sporting Goods is 1.21 times less risky than Academy Sports. It trades about 0.26 of its potential returns per unit of risk. Academy Sports And is currently generating about 0.15 per unit of risk. If you would invest  7,537  in Dicks Sporting Goods on June 30, 2022 and sell it today you would earn a total of  3,860  from holding Dicks Sporting Goods or generate 51.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Dicks Sporting Goods  vs.  Academy Sports And

 Performance (%) 
       Timeline  
Dicks Sporting Goods 
Dicks Performance
20 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, Dicks Sporting reported solid returns over the last few months and may actually be approaching a breakup point.

Dicks Price Channel

Academy Sports And 
Academy Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Academy Sports disclosed solid returns over the last few months and may actually be approaching a breakup point.

Academy Price Channel

Dicks Sporting and Academy Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dicks Sporting and Academy Sports

The main advantage of trading using opposite Dicks Sporting and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dicks Sporting 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.
Dicks Sporting vs. Clearwater Paper Corp
The idea behind Dicks Sporting Goods and Academy Sports And 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. Clearwater Paper Corp
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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