Correlation Between National Vision and Lands End

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

Diversification Opportunities for National Vision and Lands End

-0.46

Correlation Coefficient

National Vision  Lands End

Very good diversification

The 3 months correlation between National and Lands is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Lands End in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lands End 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 Lands End. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lands End has no effect on the direction of National Vision i.e., National Vision and Lands End go up and down completely randomly.

Pair Corralation between National Vision and Lands End

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Lands End. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 1.82 times less risky than Lands End. The stock trades about -0.36 of its potential returns per unit of risk. The Lands End is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  900.00  in Lands End on January 25, 2024 and sell it today you would earn a total of  410.00  from holding Lands End or generate 45.56% return on investment over 90 days.

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

National Vision Holdings  vs.  Lands End

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Lands End

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lands End are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lands End exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Lands End

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

The idea behind National Vision Holdings and Lands End 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.