Correlation Between Genuine Parts and Academy Sports

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

Diversification Opportunities for Genuine Parts and Academy Sports

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Genuine and Academy is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Genuine Parts 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 Genuine Parts 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 Genuine Parts 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 Genuine Parts i.e., Genuine Parts and Academy Sports go up and down completely randomly.

Pair Corralation between Genuine Parts and Academy Sports

Considering the 90-day investment horizon Genuine Parts is expected to generate 2.47 times less return on investment than Academy Sports. But when comparing it to its historical volatility, Genuine Parts is 2.08 times less risky than Academy Sports. It trades about 0.08 of its potential returns per unit of risk. Academy Sports And is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,293  in Academy Sports And on March 31, 2022 and sell it today you would earn a total of  2,389  from holding Academy Sports And or generate 184.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy87.93%
ValuesDaily Returns

Genuine Parts  vs.  Academy Sports And

 Performance (%) 
      Timeline 
Genuine Parts 
Genuine Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genuine Parts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Genuine Parts may actually be approaching a critical reversion point that can send shares even higher in July 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0261
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 
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 recent stock price mess, may contribute to short-term losses for the institutional investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0083
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 and Academy Sports Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Genuine Parts and Academy Sports

The main advantage of trading using opposite Genuine Parts and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genuine Parts 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 Genuine Parts 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.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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