Correlation Between Kirklands and National Vision

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

Diversification Opportunities for Kirklands and National Vision

0.47
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Kirklands and National is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Kirklands 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 Kirklands 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 Kirklands 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 Kirklands i.e., Kirklands and National Vision go up and down completely randomly.

Pair Corralation between Kirklands and National Vision

Given the investment horizon of 90 days Kirklands is expected to under-perform the National Vision. In addition to that, Kirklands is 2.07 times more volatile than National Vision Holdings. It trades about -0.18 of its total potential returns per unit of risk. National Vision Holdings is currently generating about -0.08 per unit of volatility. If you would invest  3,296  in National Vision Holdings on June 28, 2022 and sell it today you would lose (141.00)  from holding National Vision Holdings or give up 4.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Kirklands  vs.  National Vision Holdings

 Performance (%) 
       Timeline  
Kirklands 
Kirklands Performance
0 of 100
Over the last 90 days Kirklands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Kirklands is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Kirklands Price Channel

National Vision Holdings 
National Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in October 2022.

National Price Channel

Kirklands and National Vision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kirklands and National Vision

The main advantage of trading using opposite Kirklands and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirklands 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.
Kirklands vs. Clearwater Paper Corp
The idea behind Kirklands 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.
National Vision vs. Clearwater Paper Corp
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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