Correlation Between National Vision and Best Buy

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

Diversification Opportunities for National Vision and Best Buy

0.44

Correlation Coefficient

National Vision  Best Buy

Very weak diversification

The 3 months correlation between National and Best is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Best Buy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Best Buy 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 Best Buy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Best Buy has no effect on the direction of National Vision i.e., National Vision and Best Buy go up and down completely randomly.

Pair Corralation between National Vision and Best Buy

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Best Buy. In addition to that, National Vision is 1.62 times more volatile than Best Buy Co. It trades about -0.41 of its total potential returns per unit of risk. Best Buy Co is currently generating about -0.32 per unit of volatility. If you would invest  8,164  in Best Buy Co on February 1, 2024 and sell it today you would lose (800.00) from holding Best Buy Co or give up 9.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

National Vision Holdings  vs.  Best Buy Co

National Vision Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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 latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Best Buy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Best Buy Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Best Buy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Vision and Best Buy

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

The idea behind National Vision Holdings and Best Buy Co 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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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 the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.