Correlation Between National Vision and Hess

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

Diversification Opportunities for National Vision and Hess

-0.27

Correlation Coefficient

National Vision  Hess

Very good diversification

The 3 months correlation between National and Hess is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess 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 Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of National Vision i.e., National Vision and Hess go up and down completely randomly.

Pair Corralation between National Vision and Hess

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Hess. In addition to that, National Vision is 1.58 times more volatile than Hess Corporation. It trades about -0.01 of its total potential returns per unit of risk. Hess Corporation is currently generating about 0.05 per unit of volatility. If you would invest  10,420  in Hess Corporation on January 29, 2024 and sell it today you would earn a total of  5,833  from holding Hess Corporation or generate 55.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

National Vision Holdings  vs.  Hess Corp.

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 latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Hess

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hess Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Hess unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Hess

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

The idea behind National Vision Holdings and Hess Corporation 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.