Correlation Between National Vision and FactSet Research

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

Diversification Opportunities for National Vision and FactSet Research

0.63

Correlation Coefficient

National Vision  FactSet Research

Poor diversification

The 3 months correlation between National and FactSet is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems 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 FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of National Vision i.e., National Vision and FactSet Research go up and down completely randomly.

Pair Corralation between National Vision and FactSet Research

Considering the 90-day investment horizon National Vision is expected to generate 1.07 times less return on investment than FactSet Research. In addition to that, National Vision is 2.04 times more volatile than FactSet Research Systems. It trades about 0.08 of its total potential returns per unit of risk. FactSet Research Systems is currently generating about 0.17 per unit of volatility. If you would invest  42,610  in FactSet Research Systems on September 5, 2024 and sell it today you would earn a total of  5,942  from holding FactSet Research Systems or generate 13.95% return on investment over 90 days.

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

National Vision Holdings  vs.  FactSet Research Systems

National Vision Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FactSet Research Systems

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, FactSet Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and FactSet Research

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

The idea behind National Vision Holdings and FactSet Research Systems 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.