Correlation Between Celsius Holdings and Academy Sports

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

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

Diversification Opportunities for Celsius Holdings and Academy Sports

0.23

Correlation Coefficient

Celsius Holdings  Academy Sports

Modest diversification

The 3 months correlation between Celsius and Academy is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Celsius Holdings and Academy Sports OutdoorsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Academy Sports Outdo and Celsius Holdings 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 Celsius Holdings 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 Outdo has no effect on the direction of Celsius Holdings i.e., Celsius Holdings and Academy Sports go up and down completely randomly.

Pair Corralation between Celsius Holdings and Academy Sports

Given the investment horizon of 90 days Celsius Holdings is expected to generate 1.39 times more return on investment than Academy Sports. However, Celsius Holdings is 1.39 times more volatile than Academy Sports OutdoorsInc. It trades about 0.07 of its potential returns per unit of risk. Academy Sports OutdoorsInc is currently generating about 0.03 per unit of risk. If you would invest  3,711  in Celsius Holdings on January 24, 2024 and sell it today you would earn a total of  3,268  from holding Celsius Holdings or generate 88.06% return on investment over 90 days.

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

Celsius Holdings  vs.  Academy Sports OutdoorsInc

Celsius Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Celsius Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Celsius Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 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 Celsius Holdings and Academy Sports

The main advantage of trading using opposite Celsius Holdings and Academy Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celsius Holdings 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 Celsius Holdings and Academy Sports OutdoorsInc 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 Global Correlations module to find global opportunities by holding instruments from different markets.