Correlation Between Compagnie Financiere and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Compagnie Financiere 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 Compagnie Financiere and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financiere Richemont and LVMH Mot Hennessy, you can compare the effects of market volatilities on Compagnie Financiere 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 Compagnie Financiere with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financiere and LVMH Mot.
Diversification Opportunities for Compagnie Financiere and LVMH Mot
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Compagnie and LVMH is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financiere Richemont 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 Compagnie Financiere 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 Compagnie Financiere Richemont 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 Compagnie Financiere i.e., Compagnie Financiere and LVMH Mot go up and down completely randomly.
Pair Corralation between Compagnie Financiere and LVMH Mot
Assuming the 90 days horizon Compagnie Financiere Richemont is expected to generate 1.57 times more return on investment than LVMH Mot. However, Compagnie Financiere is 1.57 times more volatile than LVMH Mot Hennessy. It trades about 0.23 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.17 per unit of risk. If you would invest 1,512 in Compagnie Financiere Richemont on October 22, 2024 and sell it today you would earn a total of 271.00 from holding Compagnie Financiere Richemont or generate 17.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie Financiere Richemont vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Compagnie Financiere |
| LVMH Mot Hennessy |
Compagnie Financiere and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie Financiere and LVMH Mot
The main advantage of trading using opposite Compagnie Financiere and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financiere 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.| Compagnie Financiere vs. Chow Tai Fook | Compagnie Financiere vs. Christian Dior SE | Compagnie Financiere vs. Kering SA | Compagnie Financiere vs. Christian Dior SE |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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