Correlation Between Cooper Companies, and Academy Sports

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

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

Diversification Opportunities for Cooper Companies, and Academy Sports

0.83

Correlation Coefficient

Cooper Companies,  Academy Sports

Very poor diversification

The 3 months correlation between Cooper and Academy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Cooper Companies, and Academy Sports Outdoors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdoors and Cooper Companies, 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 The Cooper Companies, 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 Outdoors has no effect on the direction of Cooper Companies, i.e., Cooper Companies, and Academy Sports go up and down completely randomly.

Pair Corralation between Cooper Companies, and Academy Sports

Considering the 90-day investment horizon The Cooper Companies, is expected to generate 0.42 times more return on investment than Academy Sports. However, The Cooper Companies, is 2.4 times less risky than Academy Sports. It trades about -0.02 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.06 per unit of risk. If you would invest  10,606  in The Cooper Companies, on September 1, 2024 and sell it today you would lose (160.00) from holding The Cooper Companies, or give up 1.51% of portfolio value over 90 days.

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

The Cooper Companies,  vs.  Academy Sports Outdoors

Cooper Companies,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Cooper Companies, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cooper Companies, is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Cooper Companies, and Academy Sports

The main advantage of trading using opposite Cooper Companies, and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Companies, 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 The Cooper Companies, and Academy Sports Outdoors 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.