Correlation Between Sportsmans and National Vision

Can any of the company-specific risk be diversified away by investing in both Sportsmans and National Vision 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 Sportsmans and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sportsmans and National Vision Holdings, you can compare the effects of market volatilities on Sportsmans and National Vision 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 Sportsmans with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sportsmans and National Vision.

Diversification Opportunities for Sportsmans and National Vision

-0.83

Correlation Coefficient

Sportsmans  National Vision

Pay attention - limited upside

The 3 months correlation between Sportsmans and National is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sportsmans and National Vision Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Vision Holdings and Sportsmans 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 Sportsmans are associated (or correlated) with National Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Vision Holdings has no effect on the direction of Sportsmans i.e., Sportsmans and National Vision go up and down completely randomly.

Pair Corralation between Sportsmans and National Vision

Given the investment horizon of 90 days Sportsmans is expected to under-perform the National Vision. In addition to that, Sportsmans is 1.48 times more volatile than National Vision Holdings. It trades about -0.35 of its total potential returns per unit of risk. National Vision Holdings is currently generating about 0.15 per unit of volatility. If you would invest  1,010  in National Vision Holdings on December 30, 2024 and sell it today you would earn a total of  272.00  from holding National Vision Holdings or generate 26.93% return on investment over 90 days.

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

Sportsmans  vs.  National Vision Holdings

Sportsmans

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sportsmans has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Sportsmans and National Vision

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

The idea behind Sportsmans and National Vision Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.