Correlation Between 04010LAY9 and Academy Sports

Can any of the company-specific risk be diversified away by investing in both 04010LAY9 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 04010LAY9 and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ARES CAPITAL PORATION and Academy Sports Outdoors, you can compare the effects of market volatilities on 04010LAY9 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 04010LAY9 with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of 04010LAY9 and Academy Sports.

Diversification Opportunities for 04010LAY9 and Academy Sports

0.52

Correlation Coefficient

04010LAY9  Academy Sports

Very weak diversification

The 3 months correlation between 04010LAY9 and Academy is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding ARES CAPITAL PORATION 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 04010LAY9 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 ARES CAPITAL PORATION 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 04010LAY9 i.e., 04010LAY9 and Academy Sports go up and down completely randomly.

Pair Corralation between 04010LAY9 and Academy Sports

Assuming the 90 days trading horizon ARES CAPITAL PORATION is expected to generate 0.16 times more return on investment than Academy Sports. However, ARES CAPITAL PORATION is 6.14 times less risky than Academy Sports. It trades about -0.07 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  9,810  in ARES CAPITAL PORATION on September 2, 2024 and sell it today you would lose (154.00) from holding ARES CAPITAL PORATION or give up 1.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

ARES CAPITAL PORATION  vs.  Academy Sports Outdoors

ARES CAPITAL PORATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARES CAPITAL PORATION has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 04010LAY9 is not utilizing all of its potentials. The recent stock price disturbance, 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 unfluctuating 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 04010LAY9 and Academy Sports

The main advantage of trading using opposite 04010LAY9 and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 04010LAY9 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 ARES CAPITAL PORATION 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.