Correlation Between National Vision and Western Sierra
Can any of the company-specific risk be diversified away by investing in both National Vision and Western Sierra 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 Western Sierra 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 Western Sierra Mining, you can compare the effects of market volatilities on National Vision and Western Sierra 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 Western Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and Western Sierra.
Diversification Opportunities for National Vision and Western Sierra
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Western is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Western Sierra Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Sierra Mining 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 Western Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Sierra Mining has no effect on the direction of National Vision i.e., National Vision and Western Sierra go up and down completely randomly.
Pair Corralation between National Vision and Western Sierra
Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Western Sierra. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 29.43 times less risky than Western Sierra. The stock trades about -0.05 of its potential returns per unit of risk. The Western Sierra Mining is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 8.45 in Western Sierra Mining on September 2, 2024 and sell it today you would lose (7.77) from holding Western Sierra Mining or give up 91.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
National Vision Holdings vs. Western Sierra Mining
Performance |
| Timeline |
| National Vision Holdings |
| Western Sierra Mining |
National Vision and Western Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Vision and Western Sierra
The main advantage of trading using opposite National Vision and Western Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, Western Sierra 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 Western Sierra will offset losses from the drop in Western Sierra's long position.| National Vision vs. Sally Beauty Holdings | National Vision vs. MarineMax | National Vision vs. Sportsmans | National Vision vs. 1 800 FLOWERSCOM |
| Western Sierra vs. Holloman Energy Corp | Western Sierra vs. cbdMD Inc | Western Sierra vs. Evolus Inc | Western Sierra vs. CV Sciences |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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