Correlation Between CHRISTIAN DIOR and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both CHRISTIAN DIOR 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 CHRISTIAN DIOR and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHRISTIAN DIOR ADR14EO2 and LVMH Mot Hennessy, you can compare the effects of market volatilities on CHRISTIAN DIOR 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 CHRISTIAN DIOR with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHRISTIAN DIOR and LVMH Mot.
Diversification Opportunities for CHRISTIAN DIOR and LVMH Mot
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHRISTIAN and LVMH is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CHRISTIAN DIOR ADR14EO2 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 CHRISTIAN DIOR 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 CHRISTIAN DIOR ADR14EO2 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 CHRISTIAN DIOR i.e., CHRISTIAN DIOR and LVMH Mot go up and down completely randomly.
Pair Corralation between CHRISTIAN DIOR and LVMH Mot
Assuming the 90 days trading horizon CHRISTIAN DIOR ADR14EO2 is expected to under-perform the LVMH Mot. But the stock apears to be less risky and, when comparing its historical volatility, CHRISTIAN DIOR ADR14EO2 is 1.25 times less risky than LVMH Mot. The stock trades about -0.02 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 15,315 in LVMH Mot Hennessy on October 14, 2024 and sell it today you would lose (2,615) from holding LVMH Mot Hennessy or give up 17.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHRISTIAN DIOR ADR14EO2 vs. LVMH Mot Hennessy
Performance |
| Timeline |
| CHRISTIAN DIOR ADR14EO2 |
| LVMH Mot Hennessy |
CHRISTIAN DIOR and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHRISTIAN DIOR and LVMH Mot
The main advantage of trading using opposite CHRISTIAN DIOR and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHRISTIAN DIOR 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.| CHRISTIAN DIOR vs. LVMH Mot Hennessy | CHRISTIAN DIOR vs. LVMH Mot Hennessy | CHRISTIAN DIOR vs. LVMH Mot Hennessy | CHRISTIAN DIOR vs. Herms International Socit |
| LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. Herms International Socit | LVMH Mot vs. CHRISTIAN DIOR ADR14EO2 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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