Correlation Between National Vision and Cyclo Therapeutics

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

Diversification Opportunities for National Vision and Cyclo Therapeutics

0.01

Correlation Coefficient

National Vision  Cyclo Therapeutics

Significant diversification

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

Pair Corralation between National Vision and Cyclo Therapeutics

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Cyclo Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, National Vision Holdings is 4.66 times less risky than Cyclo Therapeutics. The stock trades about -0.01 of its potential returns per unit of risk. The Cyclo Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Cyclo Therapeutics on October 7, 2024 and sell it today you would lose (7.90) from holding Cyclo Therapeutics or give up 46.47% of portfolio value over 90 days.

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

National Vision Holdings  vs.  Cyclo Therapeutics

National Vision Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 3 (%) 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.

Cyclo Therapeutics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cyclo Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical indicators, Cyclo Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Cyclo Therapeutics

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

The idea behind National Vision Holdings and Cyclo Therapeutics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.