Correlation Between Walmart and National Vision

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

Diversification Opportunities for Walmart and National Vision

  Correlation Coefficient

Almost no diversification

The 3 months correlation between Walmart and National is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and National Vision go up and down completely randomly.

Pair Corralation between Walmart and National Vision

Considering the 90-day investment horizon Walmart is expected to generate 1.84 times less return on investment than National Vision. But when comparing it to its historical volatility, Walmart is 1.61 times less risky than National Vision. It trades about 0.12 of its potential returns per unit of risk. National Vision Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,696  in National Vision Holdings on September 8, 2022 and sell it today you would earn a total of  315.00  from holding National Vision Holdings or generate 8.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
ValuesDaily Returns

Walmart  vs.  National Vision Holdings

 Performance (%) 
Walmart Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak primary indicators, Walmart may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Walmart Price Channel

National Vision Holdings 
National Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in January 2023.

National Price Channel

Walmart and National Vision Volatility Contrast

   Predicted Return Density   

Pair Trading with Walmart and National Vision

The main advantage of trading using opposite Walmart and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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.
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The idea behind Walmart 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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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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