Correlation Between LVMH Moët and Hermes International
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and Hermes International 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 LVMH Moët and Hermes International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LVMH Mot Hennessy and Hermes International SA, you can compare the effects of market volatilities on LVMH Moët and Hermes International 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 LVMH Moët with a short position of Hermes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and Hermes International.
Diversification Opportunities for LVMH Moët and Hermes International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LVMH and Hermes is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Hermes International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermes International and LVMH Moët 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 LVMH Mot Hennessy are associated (or correlated) with Hermes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermes International has no effect on the direction of LVMH Moët i.e., LVMH Moët and Hermes International go up and down completely randomly.
Pair Corralation between LVMH Moët and Hermes International
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Hermes International. In addition to that, LVMH Moët is 1.07 times more volatile than Hermes International SA. It trades about -0.18 of its total potential returns per unit of risk. Hermes International SA is currently generating about -0.14 per unit of volatility. If you would invest 22,980 in Hermes International SA on August 30, 2024 and sell it today you would lose (1,392) from holding Hermes International SA or give up 6.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Hermes International SA
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Hermes International |
LVMH Moët and Hermes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moët and Hermes International
The main advantage of trading using opposite LVMH Moët and Hermes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, Hermes International 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 Hermes International will offset losses from the drop in Hermes International's long position.| LVMH Moët vs. Capri Holdings | LVMH Moët vs. Tapestry | LVMH Moët vs. Christian Dior SE | LVMH Moët vs. Burberry Group Plc |
| Hermes International vs. Capri Holdings | Hermes International vs. Tapestry | Hermes International vs. Christian Dior SE | Hermes International vs. Burberry Group Plc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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