Correlation Between Burberry Group and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both Burberry Group 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 Burberry Group and LVMH Moët 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 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 Burberry Group with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burberry Group and LVMH Moët.
Diversification Opportunities for Burberry Group and LVMH Moët
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Burberry and LVMH is -0.4. 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 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 Burberry Group i.e., Burberry Group and LVMH Moët go up and down completely randomly.
Pair Corralation between Burberry Group and LVMH Moët
Assuming the 90 days horizon Burberry Group Plc is expected to under-perform the LVMH Moët. In addition to that, Burberry Group is 1.42 times more volatile than LVMH Mot Hennessy. It trades about -0.05 of its total potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.01 per unit of volatility. If you would invest 72,334 in LVMH Mot Hennessy on August 27, 2024 and sell it today you would lose (11,565) from holding LVMH Mot Hennessy or give up 15.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| 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 Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Burberry Group and LVMH Moët
The main advantage of trading using opposite Burberry Group and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group 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.| 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 Moët vs. Hermes International SA | LVMH Moët vs. Kering SA | LVMH Moët vs. Capri Holdings | LVMH Moët 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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