Correlation Between National Vision and Card Factory

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

Diversification Opportunities for National Vision and Card Factory

-0.57

Correlation Coefficient

National Vision  Card Factory

Excellent diversification

The 3 months correlation between National and Card is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc 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 Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of National Vision i.e., National Vision and Card Factory go up and down completely randomly.

Pair Corralation between National Vision and Card Factory

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Card Factory. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 12.72 times less risky than Card Factory. The stock trades about -0.06 of its potential returns per unit of risk. The Card Factory plc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2.26  in Card Factory plc on October 20, 2024 and sell it today you would earn a total of  112.74  from holding Card Factory plc or generate 4988.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

National Vision Holdings  vs.  Card Factory plc

National Vision Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Card Factory plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Card Factory plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with National Vision and Card Factory

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

The idea behind National Vision Holdings and Card Factory plc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.