Correlation Between National Beverage and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both National Beverage and LVMH Moët 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 Beverage and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and LVMH Mot Hennessy, you can compare the effects of market volatilities on National Beverage and LVMH Moët 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 Beverage with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and LVMH Moët.
Diversification Opportunities for National Beverage and LVMH Moët
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and LVMH is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp 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 National Beverage 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 Beverage Corp are associated (or correlated) with LVMH Moët. 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 National Beverage i.e., National Beverage and LVMH Moët go up and down completely randomly.
Pair Corralation between National Beverage and LVMH Moët
Assuming the 90 days horizon National Beverage Corp is expected to generate 1.02 times more return on investment than LVMH Moët. However, National Beverage is 1.02 times more volatile than LVMH Mot Hennessy. It trades about 0.02 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 3,968 in National Beverage Corp on October 16, 2024 and sell it today you would earn a total of 272.00 from holding National Beverage Corp or generate 6.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. LVMH Mot Hennessy
Performance |
| Timeline |
| National Beverage Corp |
| LVMH Mot Hennessy |
National Beverage and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and LVMH Moët
The main advantage of trading using opposite National Beverage and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, LVMH Moët 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 Moët will offset losses from the drop in LVMH Moët's long position.| National Beverage vs. American Homes 4 | National Beverage vs. Siamgas And Petrochemicals | National Beverage vs. KENEDIX OFFICE INV | National Beverage vs. DAIRY FARM INTL |
| LVMH Moët vs. National Beverage Corp | LVMH Moët vs. GWILLI FOOD | LVMH Moët vs. MOLSON RS BEVERAGE | LVMH Moët vs. CN MODERN DAIRY |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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