Correlation Between Capri Holdings and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both Capri Holdings 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 Capri Holdings and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and LVMH Mot Hennessy, you can compare the effects of market volatilities on Capri Holdings 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 Capri Holdings with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and LVMH Moët.
Diversification Opportunities for Capri Holdings and LVMH Moët
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capri and LVMH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings 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 Capri Holdings 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 Capri Holdings 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 Capri Holdings i.e., Capri Holdings and LVMH Moët go up and down completely randomly.
Pair Corralation between Capri Holdings and LVMH Moët
Given the investment horizon of 90 days Capri Holdings is expected to generate 1.03 times more return on investment than LVMH Moët. However, Capri Holdings is 1.03 times more volatile than LVMH Mot Hennessy. It trades about 0.3 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.19 per unit of risk. If you would invest 2,061 in Capri Holdings on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Capri Holdings or generate 20.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Capri Holdings |
| LVMH Mot Hennessy |
Capri Holdings and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and LVMH Moët
The main advantage of trading using opposite Capri Holdings and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings 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.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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