Correlation Between Sally Beauty and National Vision
Can any of the company-specific risk be diversified away by investing in both Sally Beauty 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 Sally Beauty and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sally Beauty Holdings and National Vision Holdings, you can compare the effects of market volatilities on Sally Beauty 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 Sally Beauty with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sally Beauty and National Vision.
Diversification Opportunities for Sally Beauty and National Vision
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sally and National is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sally Beauty Holdings 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 Sally Beauty 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 Sally Beauty Holdings 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 Sally Beauty i.e., Sally Beauty and National Vision go up and down completely randomly.
Pair Corralation between Sally Beauty and National Vision
Considering the 90-day investment horizon Sally Beauty Holdings is expected to generate 0.86 times more return on investment than National Vision. However, Sally Beauty Holdings is 1.16 times less risky than National Vision. It trades about 0.02 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 1,129 in Sally Beauty Holdings on August 27, 2024 and sell it today you would earn a total of 168.00 from holding Sally Beauty Holdings or generate 14.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sally Beauty Holdings vs. National Vision Holdings
Performance |
| Timeline |
| Sally Beauty Holdings |
| National Vision Holdings |
Sally Beauty and National Vision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sally Beauty and National Vision
The main advantage of trading using opposite Sally Beauty and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sally Beauty 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.| Sally Beauty vs. Oriental Culture Holding | Sally Beauty vs. Hour Loop | Sally Beauty vs. Qurate Retail Series | Sally Beauty vs. Emerge Commerce |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |