Correlation Between Exxon and National Vision

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

Diversification Opportunities for Exxon and National Vision

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Exxon and National is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Exxon Mobil Corp 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 Exxon 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 Exxon Mobil Corp 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 Exxon i.e., Exxon and National Vision go up and down completely randomly.

Pair Corralation between Exxon and National Vision

Considering the 90-day investment horizon Exxon Mobil Corp is expected to generate 0.64 times more return on investment than National Vision. However, Exxon Mobil Corp is 1.56 times less risky than National Vision. It trades about 0.08 of its potential returns per unit of risk. National Vision Holdings is currently generating about 0.02 per unit of risk. If you would invest  7,923  in Exxon Mobil Corp on September 3, 2022 and sell it today you would earn a total of  3,157  from holding Exxon Mobil Corp or generate 39.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Exxon Mobil Corp  vs.  National Vision Holdings

 Performance (%) 
       Timeline  
Exxon Mobil Corp 
Exxon Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Exxon revealed solid returns over the last few months and may actually be approaching a breakup point.

Exxon Price Channel

National Vision Holdings 
National Performance
8 of 100
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 rather unsteady basic indicators, National Vision exhibited solid returns over the last few months and may actually be approaching a breakup point.

National Price Channel

Exxon and National Vision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Exxon and National Vision

The main advantage of trading using opposite Exxon and National Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exxon 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 Exxon Mobil Corp 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 CEO Directory module to screen CEOs from public companies around the world.

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