Correlation Between National Vision and Tandy Leather

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

Diversification Opportunities for National Vision and Tandy Leather

0.04

Correlation Coefficient

National Vision  Tandy Leather

Significant diversification

The 3 months correlation between National and Tandy is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and Tandy Leather Factory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandy Leather Factory 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 Tandy Leather. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandy Leather Factory has no effect on the direction of National Vision i.e., National Vision and Tandy Leather go up and down completely randomly.

Pair Corralation between National Vision and Tandy Leather

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the Tandy Leather. In addition to that, National Vision is 1.36 times more volatile than Tandy Leather Factory. It trades about -0.06 of its total potential returns per unit of risk. Tandy Leather Factory is currently generating about 0.03 per unit of volatility. If you would invest  426.00  in Tandy Leather Factory on September 24, 2024 and sell it today you would earn a total of  53.00  from holding Tandy Leather Factory or generate 12.44% return on investment over 90 days.

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

National Vision Holdings  vs.  Tandy Leather Factory

National Vision Holdings

Risk-Adjusted Performance

5 of 100

Modest

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 unfluctuating basic indicators, National Vision may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tandy Leather Factory

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tandy Leather Factory are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Tandy Leather reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Vision and Tandy Leather

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

The idea behind National Vision Holdings and Tandy Leather Factory 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.

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 the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.