Correlation Between National Vision and MYT Netherlands

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

Diversification Opportunities for National Vision and MYT Netherlands

0.2

Correlation Coefficient

National Vision  MYT Netherlands

Modest diversification

The 3 months correlation between National and MYT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Vision Holdings and MYT Netherlands Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYT Netherlands Parent 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 MYT Netherlands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYT Netherlands Parent has no effect on the direction of National Vision i.e., National Vision and MYT Netherlands go up and down completely randomly.

Pair Corralation between National Vision and MYT Netherlands

Considering the 90-day investment horizon National Vision Holdings is expected to generate 1.13 times more return on investment than MYT Netherlands. However, National Vision is 1.13 times more volatile than MYT Netherlands Parent. It trades about -0.03 of its potential returns per unit of risk. MYT Netherlands Parent is currently generating about -0.65 per unit of risk. If you would invest  1,172  in National Vision Holdings on January 5, 2025 and sell it today you would lose (41.00) from holding National Vision Holdings or give up 3.5% of portfolio value over 90 days.

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

National Vision Holdings  vs.  MYT Netherlands Parent

National Vision Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Vision Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

MYT Netherlands Parent

Risk-Adjusted Performance

Very Weak

Over the last 90 days MYT Netherlands Parent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Pair Trading with National Vision and MYT Netherlands

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

The idea behind National Vision Holdings and MYT Netherlands Parent 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.