Correlation Between Dicks Sporting and National Vision

Can any of the company-specific risk be diversified away by investing in both Dicks Sporting and National Vision 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 Dicks Sporting and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dicks Sporting Goods and National Vision Holdings, you can compare the effects of market volatilities on Dicks Sporting and National Vision 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 Dicks Sporting with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dicks Sporting and National Vision.

Diversification Opportunities for Dicks Sporting and National Vision

-0.01

Correlation Coefficient

Dicks Sporting  National Vision

Good diversification

The 3 months correlation between Dicks and National is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Dicks Sporting Goods and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings and Dicks Sporting 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 Dicks Sporting Goods are associated (or correlated) with National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Dicks Sporting i.e., Dicks Sporting and National Vision go up and down completely randomly.

Pair Corralation between Dicks Sporting and National Vision

Considering the 90-day investment horizon Dicks Sporting Goods is expected to generate 0.71 times more return on investment than National Vision. However, Dicks Sporting Goods is 1.42 times less risky than National Vision. It trades about 0.18 of its potential returns per unit of risk. National Vision Holdings is currently generating about -0.06 per unit of risk. If you would invest  21,311  in Dicks Sporting Goods on October 8, 2024 and sell it today you would earn a total of  1,492  from holding Dicks Sporting Goods or generate 7.0% return on investment over 90 days.

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

Dicks Sporting Goods  vs.  National Vision Holdings

Dicks Sporting Goods

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dicks Sporting Goods are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Dicks Sporting may actually be approaching a critical reversion point that can send shares even higher in February 2025.

National Vision Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dicks Sporting and National Vision

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

The idea behind Dicks Sporting Goods and National Vision Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.