Correlation Between National Vision and Warby Parker

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

Diversification Opportunities for National Vision and Warby Parker

-0.29

Correlation Coefficient

National Vision  Warby Parker

Very good diversification

The 3 months correlation between National and Warby is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Warby Parker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warby Parker 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 Warby Parker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warby Parker has no effect on the direction of National Vision i.e., National Vision and Warby Parker go up and down completely randomly.

Pair Corralation between National Vision and Warby Parker

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Warby Parker. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 1.42 times less risky than Warby Parker. The stock trades about -0.41 of its potential returns per unit of risk. The Warby Parker is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  1,400  in Warby Parker on February 1, 2024 and sell it today you would lose (226.00) from holding Warby Parker or give up 16.14% of portfolio value over 90 days.

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

National Vision Holdings  vs.  Warby Parker

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.

Warby Parker

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Warby Parker has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with National Vision and Warby Parker

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

The idea behind National Vision Holdings and Warby Parker 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.