Correlation Between Best Buy and National Vision

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Best Buy 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 Best Buy and National Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Best Buy Company and National Vision Holdings, you can compare the effects of market volatilities on Best Buy 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 Best Buy with a short position of National Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Best Buy and National Vision.

Diversification Opportunities for Best Buy and National Vision

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Best Buy and National is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Best Buy Company 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 Best Buy 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 Best Buy Company 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 Best Buy i.e., Best Buy and National Vision go up and down completely randomly.

Pair Corralation between Best Buy and National Vision

Considering the 90-day investment horizon Best Buy is expected to generate 5.11 times less return on investment than National Vision. But when comparing it to its historical volatility, Best Buy Company is 1.21 times less risky than National Vision. It trades about 0.04 of its potential returns per unit of risk. National Vision Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,111  in National Vision Holdings on May 21, 2022 and sell it today you would earn a total of  392.00  from holding National Vision Holdings or generate 12.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Best Buy Company  vs.  National Vision Holdings

 Performance (%) 
       Timeline  
Best Buy 
Best Buy Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Best Buy Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Best Buy showed solid returns over the last few months and may actually be approaching a breakup point.

Best Buy Price Channel

National Vision Holdings 
National Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, National Vision exhibited solid returns over the last few months and may actually be approaching a breakup point.

National Price Channel

Best Buy and National Vision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Best Buy and National Vision

The main advantage of trading using opposite Best Buy and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Best Buy 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 Best Buy Company 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.
Check out your portfolio center. 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

Other Complementary Tools

Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Fundamental Analysis
View fundamental data based on most recent published financial statements
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Go
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Go
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go