Correlation Between National Vision and Sportsmans

Can any of the company-specific risk be diversified away by investing in both National Vision and Sportsmans 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 Sportsmans 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 Sportsmans, you can compare the effects of market volatilities on National Vision and Sportsmans 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 Sportsmans. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and Sportsmans.

Diversification Opportunities for National Vision and Sportsmans

-0.22

Correlation Coefficient

National Vision  Sportsmans

Very good diversification

The 3 months correlation between National and Sportsmans is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Sportsmans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sportsmans 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 Sportsmans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sportsmans has no effect on the direction of National Vision i.e., National Vision and Sportsmans go up and down completely randomly.

Pair Corralation between National Vision and Sportsmans

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Sportsmans. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 1.39 times less risky than Sportsmans. The stock trades about -0.06 of its potential returns per unit of risk. The Sportsmans is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  490.00  in Sportsmans on March 17, 2024 and sell it today you would lose (227.00) from holding Sportsmans or give up 46.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

National Vision Holdings  vs.  Sportsmans

National Vision Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Vision Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Sportsmans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sportsmans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with National Vision and Sportsmans

The main advantage of trading using opposite National Vision and Sportsmans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Vision position performs unexpectedly, Sportsmans 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 Sportsmans will offset losses from the drop in Sportsmans' long position.

The idea behind National Vision Holdings and Sportsmans pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.