Correlation Between 615369AY1 and Academy Sports

Can any of the company-specific risk be diversified away by investing in both 615369AY1 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 615369AY1 and Academy Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MCO 375 25 FEB 52 and Academy Sports Outdoors, you can compare the effects of market volatilities on 615369AY1 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 615369AY1 with a short position of Academy Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of 615369AY1 and Academy Sports.

Diversification Opportunities for 615369AY1 and Academy Sports

0.48

Correlation Coefficient

615369AY1  Academy Sports

Very weak diversification

The 3 months correlation between 615369AY1 and Academy is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MCO 375 25 FEB 52 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 615369AY1 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 MCO 375 25 FEB 52 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 615369AY1 i.e., 615369AY1 and Academy Sports go up and down completely randomly.

Pair Corralation between 615369AY1 and Academy Sports

Assuming the 90 days trading horizon MCO 375 25 FEB 52 is expected to generate 0.6 times more return on investment than Academy Sports. However, MCO 375 25 FEB 52 is 1.67 times less risky than Academy Sports. It trades about 0.0 of its potential returns per unit of risk. Academy Sports Outdoors is currently generating about -0.07 per unit of risk. If you would invest  8,251  in MCO 375 25 FEB 52 on September 14, 2024 and sell it today you would lose (13.00) from holding MCO 375 25 FEB 52 or give up 0.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.84%
Values	Daily Returns

MCO 375 25 FEB 52  vs.  Academy Sports Outdoors

MCO 375 25

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCO 375 25 FEB 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 615369AY1 is not utilizing all of its potentials. The current 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 inconsistent 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 615369AY1 and Academy Sports

The main advantage of trading using opposite 615369AY1 and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 615369AY1 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 MCO 375 25 FEB 52 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.