Correlation Between National Vision and Viemed Healthcare

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

Diversification Opportunities for National Vision and Viemed Healthcare

-0.1

Correlation Coefficient

National Vision  Viemed Healthcare

Good diversification

The 3 months correlation between National and Viemed is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Viemed Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viemed Healthcare 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 Viemed Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viemed Healthcare has no effect on the direction of National Vision i.e., National Vision and Viemed Healthcare go up and down completely randomly.

Pair Corralation between National Vision and Viemed Healthcare

Considering the 90-day investment horizon National Vision Holdings is expected to generate 1.36 times more return on investment than Viemed Healthcare. However, National Vision is 1.36 times more volatile than Viemed Healthcare. It trades about 0.07 of its potential returns per unit of risk. Viemed Healthcare is currently generating about -0.05 per unit of risk. If you would invest  997.00  in National Vision Holdings on October 10, 2024 and sell it today you would earn a total of  93.00  from holding National Vision Holdings or generate 9.33% return on investment over 90 days.

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

National Vision Holdings  vs.  Viemed Healthcare

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.

Viemed Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Viemed Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Vision and Viemed Healthcare

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

The idea behind National Vision Holdings and Viemed Healthcare 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.