Correlation Between Academy Sports and Consumer Discretionary

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

Diversification Opportunities for Academy Sports and Consumer Discretionary

0.88

Correlation Coefficient

Academy Sports  Consumer Discretionary

Very poor diversification

The 3 months correlation between Academy and Consumer is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Academy Sports Outdoors and Consumer Discretionary Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Discretionary 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 Consumer Discretionary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Discretionary has no effect on the direction of Academy Sports i.e., Academy Sports and Consumer Discretionary go up and down completely randomly.

Pair Corralation between Academy Sports and Consumer Discretionary

Considering the 90-day investment horizon Academy Sports Outdoors is expected to generate 2.77 times more return on investment than Consumer Discretionary. However, Academy Sports is 2.77 times more volatile than Consumer Discretionary Select. It trades about 0.15 of its potential returns per unit of risk. Consumer Discretionary Select is currently generating about 0.14 per unit of risk. If you would invest  3,757  in Academy Sports Outdoors on May 6, 2025 and sell it today you would earn a total of  1,170  from holding Academy Sports Outdoors or generate 31.14% 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.  Consumer Discretionary Select

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.

Consumer Discretionary

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Discretionary Select are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Consumer Discretionary may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Academy Sports and Consumer Discretionary

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

The idea behind Academy Sports Outdoors and Consumer Discretionary Select 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.