Correlation Between GM and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and LVMH Mot Hennessy, you can compare the effects of market volatilities on GM 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 GM with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and LVMH Moët.
Diversification Opportunities for GM and LVMH Moët
Excellent diversification
The 3 months correlation between GM and LVMH is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and LVMH Moët go up and down completely randomly.
Pair Corralation between GM and LVMH Moët
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the LVMH Moët. In addition to that, GM is 1.17 times more volatile than LVMH Mot Hennessy. It trades about -0.07 of its total potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.11 per unit of volatility. If you would invest 61,346 in LVMH Mot Hennessy on November 7, 2024 and sell it today you would earn a total of 7,994 from holding LVMH Mot Hennessy or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. LVMH Mot Hennessy
Performance |
| Timeline |
| General Motors |
| LVMH Mot Hennessy |
GM and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and LVMH Moët
The main advantage of trading using opposite GM and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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.The idea behind General Motors and LVMH Mot Hennessy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LVMH Moët vs. SLR Investment Corp | LVMH Moët vs. ECHO INVESTMENT ZY | LVMH Moët vs. Mitsui Chemicals | LVMH Moët vs. Keck Seng Investments |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |