Correlation Between National Vision and Dicks Sporting

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

Diversification Opportunities for National Vision and Dicks Sporting

0.82
  Correlation Coefficient

Very poor diversification

The 6 months correlation between National and Dicks is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Dicks Sporting Goods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dicks Sporting Goods 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 Dicks Sporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dicks Sporting Goods has no effect on the direction of National Vision i.e., National Vision and Dicks Sporting go up and down completely randomly.

Pair Corralation between National Vision and Dicks Sporting

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Dicks Sporting. In addition to that, National Vision is 1.19 times more volatile than Dicks Sporting Goods. It trades about -0.11 of its total potential returns per unit of risk. Dicks Sporting Goods is currently generating about -0.07 per unit of volatility. If you would invest  10,717  in Dicks Sporting Goods on March 27, 2022 and sell it today you would lose (2,278)  from holding Dicks Sporting Goods or give up 21.26% of portfolio value over 90 days.
Time Period6 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

National Vision Holdings  vs.  Dicks Sporting Goods

 Performance (%) 
      Timeline 
National Vision Holdings 
National Performance
0 of 100
Over the last 90 days National Vision Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

National Price Channel

Dicks Sporting Goods 
Dicks Performance
0 of 100
Over the last 90 days Dicks Sporting Goods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0258
Payout Ratio
0.41
Last Split Factor
2:1
Forward Annual Dividend Rate
1.95
Dividend Date
2022-06-24
Ex Dividend Date
2022-06-09
Last Split Date
2007-10-22

Dicks Price Channel

National Vision and Dicks Sporting Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with National Vision and Dicks Sporting

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

Dicks Sporting Goods

Pair trading matchups for Dicks Sporting

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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