Correlation Between National Vision and GMS
Can any of the company-specific risk be diversified away by investing in both National Vision and GMS 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 National Vision and GMS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Vision Holdings and GMS Inc, you can compare the effects of market volatilities on National Vision and GMS 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 National Vision with a short position of GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and GMS.
Diversification Opportunities for National Vision and GMS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and GMS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS Inc and National Vision 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 National Vision Holdings are associated (or correlated) with GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of National Vision i.e., National Vision and GMS go up and down completely randomly.
Pair Corralation between National Vision and GMS
Considering the 90-day investment horizon National Vision is expected to generate 1.21 times less return on investment than GMS. In addition to that, National Vision is 1.45 times more volatile than GMS Inc. It trades about 0.11 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.2 per unit of volatility. If you would invest 9,076 in GMS Inc on August 28, 2024 and sell it today you would earn a total of 1,308 from holding GMS Inc or generate 14.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Vision Holdings vs. GMS Inc
Performance |
| Timeline |
| National Vision Holdings |
| GMS Inc |
National Vision and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Vision and GMS
The main advantage of trading using opposite National Vision and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS's long position.| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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