Correlation Between Academy Sports and 60 Degrees

Can any of the company-specific risk be diversified away by investing in both Academy Sports and 60 Degrees 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 60 Degrees 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 60 Degrees Pharmaceuticals,, you can compare the effects of market volatilities on Academy Sports and 60 Degrees 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 60 Degrees. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and 60 Degrees.

Diversification Opportunities for Academy Sports and 60 Degrees

0.51

Correlation Coefficient

Academy Sports  60 Degrees

Very weak diversification

The 3 months correlation between Academy and SXTPW is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and 60 Degrees Pharmaceuticals, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 60 Degrees Pharmaceu 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 60 Degrees. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 60 Degrees Pharmaceu has no effect on the direction of Academy Sports i.e., Academy Sports and 60 Degrees go up and down completely randomly.

Pair Corralation between Academy Sports and 60 Degrees

Considering the 90-day investment horizon Academy Sports is expected to generate 84.02 times less return on investment than 60 Degrees. But when comparing it to its historical volatility, Academy Sports Outdoors is 26.52 times less risky than 60 Degrees. It trades about 0.06 of its potential returns per unit of risk. 60 Degrees Pharmaceuticals, is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6.03  in 60 Degrees Pharmaceuticals, on October 1, 2024 and sell it today you would lose (3.19) from holding 60 Degrees Pharmaceuticals, or give up 52.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.49%
Values	Daily Returns

Academy Sports Outdoors  vs.  60 Degrees Pharmaceuticals,

Academy Sports Outdoors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports may actually be approaching a critical reversion point that can send shares even higher in January 2025.

60 Degrees Pharmaceu

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 60 Degrees Pharmaceuticals, are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, 60 Degrees showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Academy Sports and 60 Degrees

The main advantage of trading using opposite Academy Sports and 60 Degrees positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Academy Sports position performs unexpectedly, 60 Degrees 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 60 Degrees will offset losses from the drop in 60 Degrees' long position.

The idea behind Academy Sports Outdoors and 60 Degrees Pharmaceuticals, 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 the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.