Correlation Between Dow Jones and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and LVMH Mot Hennessy, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and LVMH Moët.
Diversification Opportunities for Dow Jones and LVMH Moët
Very good diversification
The 3 months correlation between Dow and LVMH is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and LVMH Moët go up and down completely randomly.
Pair Corralation between Dow Jones and LVMH Moët
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.39 times more return on investment than LVMH Moët. However, Dow Jones Industrial is 2.6 times less risky than LVMH Moët. It trades about 0.06 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.01 per unit of risk. If you would invest 4,238,757 in Dow Jones Industrial on September 26, 2024 and sell it today you would earn a total of 90,946 from holding Dow Jones Industrial or generate 2.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Dow Jones Industrial vs. LVMH Mot Hennessy
Performance |
| Timeline |
Dow Jones and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
LVMH Mot Hennessy
Pair trading matchups for LVMH Moët
Pair Trading with Dow Jones and LVMH Moët
The main advantage of trading using opposite Dow Jones and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Sabre Corpo | Dow Jones vs. Cannae Holdings | Dow Jones vs. Pekin Life Insurance | Dow Jones vs. Supercom |
| LVMH Moët vs. MICRONIC MYDATA | LVMH Moët vs. Hyrican Informationssysteme Aktiengesellschaft | LVMH Moët vs. PKSHA TECHNOLOGY INC | LVMH Moët vs. National Storage Affiliates |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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