Correlation Between National Vision and Newell Brands
Can any of the company-specific risk be diversified away by investing in both National Vision and Newell Brands 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 Newell Brands 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 Newell Brands, you can compare the effects of market volatilities on National Vision and Newell Brands 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 Newell Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and Newell Brands.
Diversification Opportunities for National Vision and Newell Brands
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Newell is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Newell Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newell Brands 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 Newell Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newell Brands has no effect on the direction of National Vision i.e., National Vision and Newell Brands go up and down completely randomly.
Pair Corralation between National Vision and Newell Brands
Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Newell Brands. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 1.18 times less risky than Newell Brands. The stock trades about -0.05 of its potential returns per unit of risk. The Newell Brands is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 811.00 in Newell Brands on September 1, 2024 and sell it today you would earn a total of 148.00 from holding Newell Brands or generate 18.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Vision Holdings vs. Newell Brands
Performance |
| Timeline |
| National Vision Holdings |
| Newell Brands |
National Vision and Newell Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Vision and Newell Brands
The main advantage of trading using opposite National Vision and Newell Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, Newell Brands 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 Newell Brands will offset losses from the drop in Newell Brands' long position.| National Vision vs. Alcon AG | National Vision vs. The Cooper Companies, | National Vision vs. AngioDynamics | National Vision vs. AptarGroup |
| Newell Brands vs. The Clorox | Newell Brands vs. Colgate Palmolive | Newell Brands vs. Procter Gamble | Newell Brands vs. Unilever PLC ADR |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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