Correlation Between 1st Federal and Academy Sports

Can any of the company-specific risk be diversified away by investing in both 1st Federal 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 1st Federal and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1st Federal Savings and Academy Sports Outdoors, you can compare the effects of market volatilities on 1st Federal 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 1st Federal with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1st Federal and Academy Sports.

Diversification Opportunities for 1st Federal and Academy Sports

0.0

Correlation Coefficient

1st Federal  Academy Sports

Pay attention - limited upside

The 3 months correlation between 1st and Academy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding 1st Federal Savings 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 1st Federal 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 1st Federal Savings 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 1st Federal i.e., 1st Federal and Academy Sports go up and down completely randomly.

Pair Corralation between 1st Federal and Academy Sports

If you would invest  4,875  in Academy Sports Outdoors on September 28, 2024 and sell it today you would earn a total of  1,157  from holding Academy Sports Outdoors or generate 23.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

1st Federal Savings  vs.  Academy Sports Outdoors

1st Federal Savings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 1st Federal Savings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, 1st Federal is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Academy Sports Outdoors

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Academy Sports is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with 1st Federal and Academy Sports

The main advantage of trading using opposite 1st Federal and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1st Federal 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 1st Federal Savings 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.