Correlation Between Burberry Group and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Burberry Group 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 Burberry Group and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burberry Group Plc and LVMH Mot Hennessy, you can compare the effects of market volatilities on Burberry Group 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 Burberry Group with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burberry Group and LVMH Mot.
Diversification Opportunities for Burberry Group and LVMH Mot
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Burberry and LVMH is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group Plc 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 Burberry Group 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 Burberry Group Plc 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 Burberry Group i.e., Burberry Group and LVMH Mot go up and down completely randomly.
Pair Corralation between Burberry Group and LVMH Mot
Assuming the 90 days horizon Burberry Group Plc is expected to under-perform the LVMH Mot. But the pink sheet apears to be less risky and, when comparing its historical volatility, Burberry Group Plc is 2.04 times less risky than LVMH Mot. The pink sheet trades about -0.03 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 65,667 in LVMH Mot Hennessy on October 22, 2024 and sell it today you would earn a total of 5,438 from holding LVMH Mot Hennessy or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Burberry Group Plc vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Burberry Group Plc |
| LVMH Mot Hennessy |
Burberry Group and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burberry Group and LVMH Mot
The main advantage of trading using opposite Burberry Group and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group 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.| Burberry Group vs. Compagnie Financiere Richemont | Burberry Group vs. Hermes International SA | Burberry Group vs. Prada Spa PK | Burberry Group vs. Swatch Group AG |
| LVMH Mot vs. Hermes International SA | LVMH Mot vs. Kering SA | LVMH Mot vs. Capri Holdings | LVMH Mot vs. Tapestry |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |