Correlation Between National Vision and JOHNSON

Can any of the company-specific risk be diversified away by investing in both National Vision and JOHNSON 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 JOHNSON 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 JOHNSON JOHNSON 495, you can compare the effects of market volatilities on National Vision and JOHNSON 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 JOHNSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and JOHNSON.

Diversification Opportunities for National Vision and JOHNSON

-0.43

Correlation Coefficient

National Vision  JOHNSON

Very good diversification

The 3 months correlation between National and JOHNSON is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and JOHNSON JOHNSON 495 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JOHNSON JOHNSON 495 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 JOHNSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JOHNSON JOHNSON 495 has no effect on the direction of National Vision i.e., National Vision and JOHNSON go up and down completely randomly.

Pair Corralation between National Vision and JOHNSON

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the JOHNSON. In addition to that, National Vision is 4.82 times more volatile than JOHNSON JOHNSON 495. It trades about -0.05 of its total potential returns per unit of risk. JOHNSON JOHNSON 495 is currently generating about 0.0 per unit of volatility. If you would invest  10,472  in JOHNSON JOHNSON 495 on September 14, 2024 and sell it today you would lose (182.00) from holding JOHNSON JOHNSON 495 or give up 1.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

National Vision Holdings  vs.  JOHNSON JOHNSON 495

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 January 2025.

JOHNSON JOHNSON 495

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JOHNSON JOHNSON 495 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JOHNSON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Vision and JOHNSON

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

The idea behind National Vision Holdings and JOHNSON JOHNSON 495 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.