Correlation Between Virtus Investment and National Vision

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

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

Diversification Opportunities for Virtus Investment and National Vision

0.68

Correlation Coefficient

Virtus Investment  National Vision

Poor diversification

The 3 months correlation between Virtus and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Investment Partners 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 Virtus Investment 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 Virtus Investment Partners 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 Virtus Investment i.e., Virtus Investment and National Vision go up and down completely randomly.

Pair Corralation between Virtus Investment and National Vision

Assuming the 90 days horizon Virtus Investment Partners is expected to under-perform the National Vision. But the stock apears to be less risky and, when comparing its historical volatility, Virtus Investment Partners is 1.16 times less risky than National Vision. The stock trades about -0.24 of its potential returns per unit of risk. The National Vision Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,010  in National Vision Holdings on October 26, 2024 and sell it today you would earn a total of  60.00  from holding National Vision Holdings or generate 5.94% return on investment over 90 days.

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

Virtus Investment Partners  vs.  National Vision Holdings

Virtus Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

National Vision Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, National Vision unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Virtus Investment and National Vision

The main advantage of trading using opposite Virtus Investment and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Investment 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 Virtus Investment Partners 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.