Correlation Between NRG Energy and National Vision
Can any of the company-specific risk be diversified away by investing in both NRG Energy and National Vision 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 NRG Energy and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and National Vision Holdings, you can compare the effects of market volatilities on NRG Energy and National Vision 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 NRG Energy with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and National Vision.
Diversification Opportunities for NRG Energy and National Vision
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NRG and National is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings and NRG Energy 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 NRG Energy are associated (or correlated) with National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of NRG Energy i.e., NRG Energy and National Vision go up and down completely randomly.
Pair Corralation between NRG Energy and National Vision
Considering the 90-day investment horizon NRG Energy is expected to generate 0.57 times more return on investment than National Vision. However, NRG Energy is 1.75 times less risky than National Vision. It trades about 0.13 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.05 per unit of risk. If you would invest 3,132 in NRG Energy on September 3, 2024 and sell it today you would earn a total of 7,029 from holding NRG Energy or generate 224.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. National Vision Holdings
Performance |
| Timeline |
| NRG Energy |
| National Vision Holdings |
NRG Energy and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and National Vision
The main advantage of trading using opposite NRG Energy and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, National Vision 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 National Vision will offset losses from the drop in National Vision's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |