Correlation Between CAL MAINE and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both CAL MAINE 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 CAL MAINE and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAL MAINE FOODS and LVMH Mot Hennessy, you can compare the effects of market volatilities on CAL MAINE 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 CAL MAINE with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and LVMH Mot.
Diversification Opportunities for CAL MAINE and LVMH Mot
Very poor diversification
The 3 months correlation between CAL and LVMH is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS 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 CAL MAINE 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 CAL MAINE FOODS 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 CAL MAINE i.e., CAL MAINE and LVMH Mot go up and down completely randomly.
Pair Corralation between CAL MAINE and LVMH Mot
Assuming the 90 days trading horizon CAL MAINE is expected to generate 1.17 times less return on investment than LVMH Mot. But when comparing it to its historical volatility, CAL MAINE FOODS is 1.07 times less risky than LVMH Mot. It trades about 0.17 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 63,500 in LVMH Mot Hennessy on November 6, 2024 and sell it today you would earn a total of 6,500 from holding LVMH Mot Hennessy or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. LVMH Mot Hennessy
Performance |
| Timeline |
| CAL MAINE FOODS |
| LVMH Mot Hennessy |
CAL MAINE and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and LVMH Mot
The main advantage of trading using opposite CAL MAINE and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE 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.| CAL MAINE vs. ELMOS SEMICONDUCTOR | CAL MAINE vs. Magnachip Semiconductor | CAL MAINE vs. Elmos Semiconductor SE | CAL MAINE vs. Nordic Semiconductor ASA |
| LVMH Mot vs. InterContinental Hotels Group | LVMH Mot vs. Wyndham Hotels Resorts | LVMH Mot vs. New China Life | LVMH Mot vs. Goosehead Insurance |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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