Correlation Between VITEC SOFTWARE and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both VITEC SOFTWARE 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 VITEC SOFTWARE and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VITEC SOFTWARE GROUP and LVMH Mot Hennessy, you can compare the effects of market volatilities on VITEC SOFTWARE 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 VITEC SOFTWARE with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of VITEC SOFTWARE and LVMH Mot.
Diversification Opportunities for VITEC SOFTWARE and LVMH Mot
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VITEC and LVMH is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VITEC SOFTWARE GROUP 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 VITEC SOFTWARE 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 VITEC SOFTWARE GROUP 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 VITEC SOFTWARE i.e., VITEC SOFTWARE and LVMH Mot go up and down completely randomly.
Pair Corralation between VITEC SOFTWARE and LVMH Mot
Assuming the 90 days horizon VITEC SOFTWARE GROUP is expected to generate 1.82 times more return on investment than LVMH Mot. However, VITEC SOFTWARE is 1.82 times more volatile than LVMH Mot Hennessy. It trades about 0.08 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.1 per unit of risk. If you would invest 4,332 in VITEC SOFTWARE GROUP on October 17, 2024 and sell it today you would earn a total of 138.00 from holding VITEC SOFTWARE GROUP or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VITEC SOFTWARE GROUP vs. LVMH Mot Hennessy
Performance |
| Timeline |
| VITEC SOFTWARE GROUP |
| LVMH Mot Hennessy |
VITEC SOFTWARE and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VITEC SOFTWARE and LVMH Mot
The main advantage of trading using opposite VITEC SOFTWARE and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VITEC SOFTWARE 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.| VITEC SOFTWARE vs. FIREWEED METALS P | VITEC SOFTWARE vs. GALENA MINING LTD | VITEC SOFTWARE vs. Hyster Yale Materials Handling | VITEC SOFTWARE vs. ADRIATIC METALS LS 013355 |
| LVMH Mot vs. Zurich Insurance Group | LVMH Mot vs. United Insurance Holdings | LVMH Mot vs. The Hanover Insurance | LVMH Mot vs. InterContinental Hotels Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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