Correlation Between China Aircraft and National Vision
Can any of the company-specific risk be diversified away by investing in both China Aircraft and National Vision 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 China Aircraft and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Aircraft Leasing and National Vision Holdings, you can compare the effects of market volatilities on China Aircraft and National Vision 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 China Aircraft with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and National Vision.
Diversification Opportunities for China Aircraft and National Vision
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and National is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of China Aircraft i.e., China Aircraft and National Vision go up and down completely randomly.
Pair Corralation between China Aircraft and National Vision
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 1.28 times more return on investment than National Vision. However, China Aircraft is 1.28 times more volatile than National Vision Holdings. It trades about 0.08 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.04 per unit of risk. If you would invest 20.00 in China Aircraft Leasing on September 3, 2024 and sell it today you would earn a total of 20.00 from holding China Aircraft Leasing or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Aircraft Leasing vs. National Vision Holdings
Performance |
| Timeline |
| China Aircraft Leasing |
| National Vision Holdings |
China Aircraft and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and National Vision
The main advantage of trading using opposite China Aircraft and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| China Aircraft vs. United Rentals | China Aircraft vs. Ashtead Gro | China Aircraft vs. Ashtead Group plc | China Aircraft vs. AerCap Holdings NV |
| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
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.
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