Correlation Between LVMH Moët and Kering SA
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and Kering SA 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 Kering SA 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 Kering SA, you can compare the effects of market volatilities on LVMH Moët and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and Kering SA.
Diversification Opportunities for LVMH Moët and Kering SA
Very poor diversification
The 3 months correlation between LVMH and Kering is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of LVMH Moët i.e., LVMH Moët and Kering SA go up and down completely randomly.
Pair Corralation between LVMH Moët and Kering SA
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Kering SA. But the pink sheet apears to be less risky and, when comparing its historical volatility, LVMH Mot Hennessy is 1.48 times less risky than Kering SA. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Kering SA is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 2,534 in Kering SA on August 23, 2024 and sell it today you would lose (260.00) from holding Kering SA or give up 10.26% 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. Kering SA
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Kering SA |
LVMH Moët and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moët and Kering SA
The main advantage of trading using opposite LVMH Moët and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.| LVMH Moët vs. Hermes International SA | LVMH Moët vs. Kering SA | LVMH Moët vs. Capri Holdings | LVMH Moët vs. Tapestry |
| Kering SA vs. Burberry Group Plc | Kering SA vs. Swatch Group AG | Kering SA vs. Prada Spa PK | Kering SA vs. Compagnie Financire Richemont |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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