Correlation Between Academy Sports and Playtika Holding

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

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

Diversification Opportunities for Academy Sports and Playtika Holding

-0.34

Correlation Coefficient

Academy Sports  Playtika Holding

Very good diversification

The 3 months correlation between Academy and Playtika is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Playtika Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playtika Holding Corp 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 Outdoors are associated (or correlated) with Playtika Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playtika Holding Corp has no effect on the direction of Academy Sports i.e., Academy Sports and Playtika Holding go up and down completely randomly.

Pair Corralation between Academy Sports and Playtika Holding

Considering the 90-day investment horizon Academy Sports Outdoors is expected to under-perform the Playtika Holding. In addition to that, Academy Sports is 1.17 times more volatile than Playtika Holding Corp. It trades about -0.43 of its total potential returns per unit of risk. Playtika Holding Corp is currently generating about 0.41 per unit of volatility. If you would invest  751.00  in Playtika Holding Corp on August 21, 2024 and sell it today you would earn a total of  94.00  from holding Playtika Holding Corp or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Academy Sports Outdoors  vs.  Playtika Holding Corp

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Playtika Holding Corp

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playtika Holding Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Playtika Holding disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Academy Sports and Playtika Holding

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

The idea behind Academy Sports Outdoors and Playtika Holding Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.