Correlation Between LVMH Moet and Compagnie Financiere
Can any of the company-specific risk be diversified away by investing in both LVMH Moet and Compagnie Financiere 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 Moet and Compagnie Financiere into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LVMH Moet Hennessy and Compagnie Financiere Richemont, you can compare the effects of market volatilities on LVMH Moet and Compagnie Financiere 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 Moet with a short position of Compagnie Financiere. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moet and Compagnie Financiere.
Diversification Opportunities for LVMH Moet and Compagnie Financiere
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LVMH and Compagnie is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Moet Hennessy and Compagnie Financiere Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financiere and LVMH Moet 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 Moet Hennessy are associated (or correlated) with Compagnie Financiere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financiere has no effect on the direction of LVMH Moet i.e., LVMH Moet and Compagnie Financiere go up and down completely randomly.
Pair Corralation between LVMH Moet and Compagnie Financiere
If you would invest 1,514 in Compagnie Financiere Richemont on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Compagnie Financiere Richemont or generate 27.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 5.0% |
| Values | Daily Returns |
LVMH Moet Hennessy vs. Compagnie Financiere Richemont
Performance |
| Timeline |
| LVMH Moet Hennessy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Compagnie Financiere |
LVMH Moet and Compagnie Financiere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moet and Compagnie Financiere
The main advantage of trading using opposite LVMH Moet and Compagnie Financiere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moet position performs unexpectedly, Compagnie Financiere 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 Compagnie Financiere will offset losses from the drop in Compagnie Financiere's long position.| LVMH Moet vs. Hermes International SA | LVMH Moet vs. Hermes International SCA | LVMH Moet vs. Kering SA | LVMH Moet vs. Capri Holdings |
| Compagnie Financiere vs. Burberry Group Plc | Compagnie Financiere vs. Hermes International SA | Compagnie Financiere vs. Prada Spa PK | Compagnie Financiere vs. Swatch Group AG |
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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