Correlation Between National Vision and Kite Realty

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

Diversification Opportunities for National Vision and Kite Realty

-0.56

Correlation Coefficient

National Vision  Kite Realty

Excellent diversification

The 3 months correlation between National and Kite is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of National Vision i.e., National Vision and Kite Realty go up and down completely randomly.

Pair Corralation between National Vision and Kite Realty

Considering the 90-day investment horizon National Vision Holdings is expected to generate 1.75 times more return on investment than Kite Realty. However, National Vision is 1.75 times more volatile than Kite Realty Group. It trades about 0.14 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.08 per unit of risk. If you would invest  1,057  in National Vision Holdings on December 27, 2024 and sell it today you would earn a total of  269.00  from holding National Vision Holdings or generate 25.45% 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.  Kite Realty Group

National Vision Holdings

Risk-Adjusted Performance

Good

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

Kite Realty Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kite Realty Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with National Vision and Kite Realty

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

The idea behind National Vision Holdings and Kite Realty Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..