Correlation Between Nomad Foods and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Nomad Foods and LVMH Mot 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 Nomad Foods and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomad Foods and LVMH Mot Hennessy, you can compare the effects of market volatilities on Nomad Foods and LVMH Mot 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 Nomad Foods with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomad Foods and LVMH Mot.
Diversification Opportunities for Nomad Foods and LVMH Mot
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nomad and LVMH is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nomad Foods and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy and Nomad Foods 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 Nomad Foods are associated (or correlated) with LVMH Mot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Nomad Foods i.e., Nomad Foods and LVMH Mot go up and down completely randomly.
Pair Corralation between Nomad Foods and LVMH Mot
Assuming the 90 days trading horizon Nomad Foods is expected to generate 0.61 times more return on investment than LVMH Mot. However, Nomad Foods is 1.64 times less risky than LVMH Mot. It trades about 0.01 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.01 per unit of risk. If you would invest 1,542 in Nomad Foods on October 18, 2024 and sell it today you would earn a total of 38.00 from holding Nomad Foods or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomad Foods vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Nomad Foods |
| LVMH Mot Hennessy |
Nomad Foods and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomad Foods and LVMH Mot
The main advantage of trading using opposite Nomad Foods and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomad Foods position performs unexpectedly, LVMH Mot 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 LVMH Mot will offset losses from the drop in LVMH Mot's long position.| Nomad Foods vs. PARKEN Sport Entertainment | Nomad Foods vs. CLOVER HEALTH INV | Nomad Foods vs. ZINC MEDIA GR | Nomad Foods vs. HEALTHSTREAM |
| LVMH Mot vs. Nomad Foods | LVMH Mot vs. Soken Chemical Engineering | LVMH Mot vs. Performance Food Group | LVMH Mot vs. TYSON FOODS A |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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