Correlation Between Hermès International and Christian Dior
Can any of the company-specific risk be diversified away by investing in both Hermès International and Christian Dior 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 Hermès International and Christian Dior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herms International Socit and Christian Dior SE, you can compare the effects of market volatilities on Hermès International and Christian Dior 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 Hermès International with a short position of Christian Dior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hermès International and Christian Dior.
Diversification Opportunities for Hermès International and Christian Dior
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hermès and Christian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Herms International Socit and Christian Dior SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Christian Dior SE and Hermès International 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 Herms International Socit are associated (or correlated) with Christian Dior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Christian Dior SE has no effect on the direction of Hermès International i.e., Hermès International and Christian Dior go up and down completely randomly.
Pair Corralation between Hermès International and Christian Dior
Assuming the 90 days horizon Herms International Socit is expected to generate 0.97 times more return on investment than Christian Dior. However, Herms International Socit is 1.03 times less risky than Christian Dior. It trades about 0.11 of its potential returns per unit of risk. Christian Dior SE is currently generating about 0.01 per unit of risk. If you would invest 212,000 in Herms International Socit on October 14, 2024 and sell it today you would earn a total of 25,300 from holding Herms International Socit or generate 11.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herms International Socit vs. Christian Dior SE
Performance |
| Timeline |
| Herms International Socit |
| Christian Dior SE |
Hermès International and Christian Dior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hermès International and Christian Dior
The main advantage of trading using opposite Hermès International and Christian Dior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hermès International position performs unexpectedly, Christian Dior 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 Christian Dior will offset losses from the drop in Christian Dior's long position.| Hermès International vs. LVMH Mot Hennessy | Hermès International vs. LVMH Mot Hennessy | Hermès International vs. Christian Dior SE | Hermès International vs. Compagnie Financire Richemont |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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