Correlation Between Card Factory and National Vision
Can any of the company-specific risk be diversified away by investing in both Card Factory 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 Card Factory and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Card Factory plc and National Vision Holdings, you can compare the effects of market volatilities on Card Factory 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 Card Factory with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Card Factory and National Vision.
Diversification Opportunities for Card Factory and National Vision
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Card and National is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Card Factory plc 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 Card Factory 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 Card Factory plc 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 Card Factory i.e., Card Factory and National Vision go up and down completely randomly.
Pair Corralation between Card Factory and National Vision
Assuming the 90 days horizon Card Factory plc is expected to under-perform the National Vision. In addition to that, Card Factory is 1.73 times more volatile than National Vision Holdings. It trades about -0.2 of its total potential returns per unit of risk. National Vision Holdings is currently generating about 0.35 per unit of volatility. If you would invest 996.00 in National Vision Holdings on August 28, 2024 and sell it today you would earn a total of 226.00 from holding National Vision Holdings or generate 22.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Card Factory plc vs. National Vision Holdings
Performance |
| Timeline |
| Card Factory plc |
| National Vision Holdings |
Card Factory and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Card Factory and National Vision
The main advantage of trading using opposite Card Factory and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Card Factory 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.| Card Factory vs. Dixons Carphone plc | Card Factory vs. Ceconomy AG ADR | Card Factory vs. Tandy Leather Factory | Card Factory vs. Green River Gold |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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