Correlation Between Academy Sports and Rev

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

Diversification Opportunities for Academy Sports and Rev

0.8

Correlation Coefficient

Academy Sports  Rev

Very poor diversification

The 3 months correlation between Academy and Rev is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev Group 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 Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Academy Sports i.e., Academy Sports and Rev go up and down completely randomly.

Pair Corralation between Academy Sports and Rev

Considering the 90-day investment horizon Academy Sports is expected to generate 1.12 times less return on investment than Rev. In addition to that, Academy Sports is 1.39 times more volatile than Rev Group. It trades about 0.14 of its total potential returns per unit of risk. Rev Group is currently generating about 0.23 per unit of volatility. If you would invest  3,552  in Rev Group on May 6, 2025 and sell it today you would earn a total of  1,362  from holding Rev Group or generate 38.36% return on investment over 90 days.

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

Academy Sports Outdoors  vs.  Rev Group

Academy Sports Outdoors

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Academy Sports Outdoors are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Academy Sports displayed solid returns over the last few months and may actually be approaching a breakup point.

Rev Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rev Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Rev reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Academy Sports and Rev

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

The idea behind Academy Sports Outdoors and Rev Group 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.