Correlation Between National Vision and Build A

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

Diversification Opportunities for National Vision and Build A

0.33

Correlation Coefficient

National Vision  Build A

Weak diversification

The 3 months correlation between National and Build is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Build A Bear Workshop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Build A Bear 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 Build A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Build A Bear has no effect on the direction of National Vision i.e., National Vision and Build A go up and down completely randomly.

Pair Corralation between National Vision and Build A

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Build A. In addition to that, National Vision is 1.82 times more volatile than Build A Bear Workshop. It trades about -0.41 of its total potential returns per unit of risk. Build A Bear Workshop is currently generating about -0.18 per unit of volatility. If you would invest  2,899  in Build A Bear Workshop on January 20, 2024 and sell it today you would lose (145.00) from holding Build A Bear Workshop or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

National Vision Holdings  vs.  Build A Bear Workshop

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 rather sound basic indicators, National Vision is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Build A Bear

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Build A Bear Workshop are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Build A showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Build A

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

The idea behind National Vision Holdings and Build A Bear Workshop 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.