Correlation Between National Vision and Sally Beauty
Can any of the company-specific risk be diversified away by investing in both National Vision and Sally Beauty 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 Sally Beauty 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 Sally Beauty Holdings, you can compare the effects of market volatilities on National Vision and Sally Beauty 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 Sally Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and Sally Beauty.
Diversification Opportunities for National Vision and Sally Beauty
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Sally is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Sally Beauty Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sally Beauty Holdings 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 Sally Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sally Beauty Holdings has no effect on the direction of National Vision i.e., National Vision and Sally Beauty go up and down completely randomly.
Pair Corralation between National Vision and Sally Beauty
Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Sally Beauty. In addition to that, National Vision is 1.04 times more volatile than Sally Beauty Holdings. It trades about -0.1 of its total potential returns per unit of risk. Sally Beauty Holdings is currently generating about 0.02 per unit of volatility. If you would invest 1,263 in Sally Beauty Holdings on August 27, 2024 and sell it today you would earn a total of 34.00 from holding Sally Beauty Holdings or generate 2.69% 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. Sally Beauty Holdings
Performance |
| Timeline |
| National Vision Holdings |
| Sally Beauty Holdings |
National Vision and Sally Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Vision and Sally Beauty
The main advantage of trading using opposite National Vision and Sally Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, Sally Beauty 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 Sally Beauty will offset losses from the drop in Sally Beauty's long position.| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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