Correlation Between Academy Sports and MarineMax

Can any of the company-specific risk be diversified away by investing in both Academy Sports and MarineMax 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 MarineMax into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Academy Sports Outdoors and MarineMax, you can compare the effects of market volatilities on Academy Sports and MarineMax 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 MarineMax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and MarineMax.

Diversification Opportunities for Academy Sports and MarineMax

0.66

Correlation Coefficient

Academy Sports  MarineMax

Poor diversification

The 3 months correlation between Academy and MarineMax is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax 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 Outdoors are associated (or correlated) with MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of Academy Sports i.e., Academy Sports and MarineMax go up and down completely randomly.

Pair Corralation between Academy Sports and MarineMax

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the MarineMax. But the stock apears to be less risky and, when comparing its historical volatility, Academy Sports Outdoors is 1.64 times less risky than MarineMax. The stock trades about -0.06 of its potential returns per unit of risk. The MarineMax is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,155  in MarineMax on September 1, 2024 and sell it today you would earn a total of  277.00  from holding MarineMax or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Academy Sports Outdoors  vs.  MarineMax

Academy Sports Outdoors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Academy Sports Outdoors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

MarineMax

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MarineMax are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, MarineMax may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Academy Sports and MarineMax

The main advantage of trading using opposite Academy Sports and MarineMax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, MarineMax 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 MarineMax will offset losses from the drop in MarineMax's long position.

The idea behind Academy Sports Outdoors and MarineMax 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.

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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 the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.