Correlation Between Academy Sports and Delek Drilling

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

By analyzing existing cross correlation between Academy Sports OutdoorsInc and Delek Drilling , you can compare the effects of market volatilities on Academy Sports and Delek Drilling 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 Delek Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Delek Drilling.

Diversification Opportunities for Academy Sports and Delek Drilling

0.01

Correlation Coefficient

Academy Sports  Delek Drilling

Significant diversification

The 3 months correlation between Academy and Delek is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports OutdoorsInc and Delek Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delek Drilling 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 OutdoorsInc are associated (or correlated) with Delek Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delek Drilling has no effect on the direction of Academy Sports i.e., Academy Sports and Delek Drilling go up and down completely randomly.

Pair Corralation between Academy Sports and Delek Drilling

Considering the 90-day investment horizon Academy Sports OutdoorsInc is expected to under-perform the Delek Drilling. In addition to that, Academy Sports is 1.15 times more volatile than Delek Drilling . It trades about -0.21 of its total potential returns per unit of risk. Delek Drilling is currently generating about 0.0 per unit of volatility. If you would invest  258.00  in Delek Drilling on February 2, 2024 and sell it today you would lose (1.00) from holding Delek Drilling or give up 0.39% of portfolio value over 90 days.

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

Academy Sports OutdoorsInc  vs.  Delek Drilling

Academy Sports Outdo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Academy Sports OutdoorsInc 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.

Delek Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delek Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Delek Drilling is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Academy Sports and Delek Drilling

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

The idea behind Academy Sports OutdoorsInc and Delek Drilling 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.