Correlation Between Kirklands and Academy Sports

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

Diversification Opportunities for Kirklands and Academy Sports

0.26
  Correlation Coefficient

Modest diversification

The 3 months correlation between Kirklands and Academy is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kirklands 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 Kirklands 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 Kirklands 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 Kirklands i.e., Kirklands and Academy Sports go up and down completely randomly.

Pair Corralation between Kirklands and Academy Sports

Given the investment horizon of 90 days Kirklands is expected to under-perform the Academy Sports. In addition to that, Kirklands is 1.66 times more volatile than Academy Sports And. It trades about -0.01 of its total potential returns per unit of risk. Academy Sports And is currently generating about 0.09 per unit of volatility. If you would invest  1,328  in Academy Sports And on June 30, 2022 and sell it today you would earn a total of  3,435  from holding Academy Sports And or generate 258.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Kirklands  vs.  Academy Sports And

 Performance (%) 
       Timeline  
Kirklands 
Kirklands Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Kirklands are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Kirklands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kirklands Price Channel

Academy Sports And 
Academy Performance
12 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports And are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Academy Sports disclosed solid returns over the last few months and may actually be approaching a breakup point.

Academy Price Channel

Kirklands and Academy Sports Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kirklands and Academy Sports

The main advantage of trading using opposite Kirklands and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirklands 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.
Kirklands vs. Advance Auto Parts
The idea behind Kirklands 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. Advance Auto Parts
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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