Correlation Between LVMH Moët and Swatch Group
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and Swatch Group 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 Swatch Group 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 Swatch Group AG, you can compare the effects of market volatilities on LVMH Moët and Swatch Group 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 Swatch Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and Swatch Group.
Diversification Opportunities for LVMH Moët and Swatch Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LVMH and Swatch is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Swatch Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group AG 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 Swatch Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group AG has no effect on the direction of LVMH Moët i.e., LVMH Moët and Swatch Group go up and down completely randomly.
Pair Corralation between LVMH Moët and Swatch Group
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Swatch Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, LVMH Mot Hennessy is 1.06 times less risky than Swatch Group. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Swatch Group AG is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 1,019 in Swatch Group AG on August 31, 2024 and sell it today you would lose (112.00) from holding Swatch Group AG or give up 10.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Swatch Group AG
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Swatch Group AG |
LVMH Moët and Swatch Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moët and Swatch Group
The main advantage of trading using opposite LVMH Moët and Swatch Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, Swatch Group 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 Swatch Group will offset losses from the drop in Swatch Group's long position.| LVMH Moët vs. Hermes International SA | LVMH Moët vs. Kering SA | LVMH Moët vs. Capri Holdings | LVMH Moët vs. Tapestry |
| Swatch Group vs. Kering SA | Swatch Group vs. Burberry Group Plc | Swatch Group vs. Prada Spa PK | Swatch Group 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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