Correlation Between Academy Sports and Berkshire Hathaway

Can any of the company-specific risk be diversified away by investing in both Academy Sports and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway, you can compare the effects of market volatilities on Academy Sports and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Academy Sports and Berkshire Hathaway.

Diversification Opportunities for Academy Sports and Berkshire Hathaway

0.0

Correlation Coefficient

Academy Sports  Berkshire Hathaway

Pay attention - limited upside

The 3 months correlation between Academy and Berkshire is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports OutdoorsInc and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Academy Sports i.e., Academy Sports and Berkshire Hathaway go up and down completely randomly.

Pair Corralation between Academy Sports and Berkshire Hathaway

If you would invest (100.00) in Berkshire Hathaway on February 6, 2024 and sell it today you would earn a total of  100.00  from holding Berkshire Hathaway or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Academy Sports OutdoorsInc  vs.  Berkshire Hathaway

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 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.

Berkshire Hathaway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkshire Hathaway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Berkshire Hathaway is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Academy Sports and Berkshire Hathaway

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

The idea behind Academy Sports OutdoorsInc and Berkshire Hathaway 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.