Correlation Between National Vision and Nova Lithium
Can any of the company-specific risk be diversified away by investing in both National Vision and Nova Lithium 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 Nova Lithium 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 Nova Lithium Corp, you can compare the effects of market volatilities on National Vision and Nova Lithium 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 Nova Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and Nova Lithium.
Diversification Opportunities for National Vision and Nova Lithium
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Nova is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Nova Lithium Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Lithium Corp 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 Nova Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Lithium Corp has no effect on the direction of National Vision i.e., National Vision and Nova Lithium go up and down completely randomly.
Pair Corralation between National Vision and Nova Lithium
Considering the 90-day investment horizon National Vision is expected to generate 1.59 times less return on investment than Nova Lithium. But when comparing it to its historical volatility, National Vision Holdings is 4.75 times less risky than Nova Lithium. It trades about 0.13 of its potential returns per unit of risk. Nova Lithium Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Nova Lithium Corp on November 4, 2024 and sell it today you would earn a total of 0.00 from holding Nova Lithium Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Vision Holdings vs. Nova Lithium Corp
Performance |
| Timeline |
| National Vision Holdings |
| Nova Lithium Corp |
National Vision and Nova Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Vision and Nova Lithium
The main advantage of trading using opposite National Vision and Nova Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, Nova Lithium 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 Nova Lithium will offset losses from the drop in Nova Lithium's long position.| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
| Nova Lithium vs. Saia Inc | Nova Lithium vs. PennantPark Floating Rate | Nova Lithium vs. Verra Mobility Corp | Nova Lithium vs. Toro |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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