Correlation Between National Vision and WESCO

Can any of the company-specific risk be diversified away by investing in both National Vision and WESCO 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 WESCO 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 WESCO Distribution 725, you can compare the effects of market volatilities on National Vision and WESCO 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 WESCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Vision and WESCO.

Diversification Opportunities for National Vision and WESCO

-0.15

Correlation Coefficient

National Vision  WESCO

Good diversification

The 3 months correlation between National and WESCO is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and WESCO Distribution 725 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESCO Distribution 725 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 WESCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESCO Distribution 725 has no effect on the direction of National Vision i.e., National Vision and WESCO go up and down completely randomly.

Pair Corralation between National Vision and WESCO

Considering the 90-day investment horizon National Vision Holdings is expected to under-perform the WESCO. In addition to that, National Vision is 10.22 times more volatile than WESCO Distribution 725. It trades about -0.06 of its total potential returns per unit of risk. WESCO Distribution 725 is currently generating about 0.0 per unit of volatility. If you would invest  10,324  in WESCO Distribution 725 on September 28, 2024 and sell it today you would lose (52.00) from holding WESCO Distribution 725 or give up 0.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.58%
Values	Daily Returns

National Vision Holdings  vs.  WESCO Distribution 725

National Vision Holdings

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, National Vision is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

WESCO Distribution 725

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESCO Distribution 725 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WESCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Vision and WESCO

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

The idea behind National Vision Holdings and WESCO Distribution 725 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..