Correlation Between National Vision and Pet Acquisition

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

Diversification Opportunities for National Vision and Pet Acquisition

-0.03

Correlation Coefficient

National Vision  Pet Acquisition

Good diversification

The 3 months correlation between National and Pet is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Pet Acquisition LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pet Acquisition LLC 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 Pet Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pet Acquisition LLC has no effect on the direction of National Vision i.e., National Vision and Pet Acquisition go up and down completely randomly.

Pair Corralation between National Vision and Pet Acquisition

Considering the 90-day investment horizon National Vision is expected to generate 2.48 times less return on investment than Pet Acquisition. But when comparing it to its historical volatility, National Vision Holdings is 2.69 times less risky than Pet Acquisition. It trades about 0.12 of its potential returns per unit of risk. Pet Acquisition LLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  306.00  in Pet Acquisition LLC on September 3, 2024 and sell it today you would earn a total of  121.00  from holding Pet Acquisition LLC or generate 39.54% 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.  Pet Acquisition LLC

National Vision Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 9 (%) 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.

Pet Acquisition LLC

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pet Acquisition LLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Pet Acquisition reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Pet Acquisition

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

The idea behind National Vision Holdings and Pet Acquisition LLC 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.