Correlation Between National Vision and Life Time
Can any of the company-specific risk be diversified away by investing in both National Vision and Life Time 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 Life Time 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 Life Time Group, you can compare the effects of market volatilities on National Vision and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and Life Time.
Diversification Opportunities for National Vision and Life Time
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Life is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of National Vision i.e., National Vision and Life Time go up and down completely randomly.
Pair Corralation between National Vision and Life Time
Considering the 90-day investment horizon National Vision Holdings is expected to generate 1.19 times more return on investment than Life Time. However, National Vision is 1.19 times more volatile than Life Time Group. It trades about 0.12 of its potential returns per unit of risk. Life Time Group is currently generating about 0.04 per unit of risk. If you would invest 1,026 in National Vision Holdings on September 2, 2024 and sell it today you would earn a total of 184.00 from holding National Vision Holdings or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Vision Holdings vs. Life Time Group
Performance |
| Timeline |
| National Vision Holdings |
| Life Time Group |
National Vision and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Vision and Life Time
The main advantage of trading using opposite National Vision and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time's long position.| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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