Correlation Between LVMH Mot and Airbus Group
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and Airbus 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 Mot and Airbus 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 Airbus Group SE, you can compare the effects of market volatilities on LVMH Mot and Airbus 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 Mot with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and Airbus Group.
Diversification Opportunities for LVMH Mot and Airbus Group
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LVMH and Airbus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE and LVMH Mot 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 Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of LVMH Mot i.e., LVMH Mot and Airbus Group go up and down completely randomly.
Pair Corralation between LVMH Mot and Airbus Group
Assuming the 90 days horizon LVMH Mot Hennessy is expected to generate 2.75 times more return on investment than Airbus Group. However, LVMH Mot is 2.75 times more volatile than Airbus Group SE. It trades about 0.2 of its potential returns per unit of risk. Airbus Group SE is currently generating about 0.23 per unit of risk. If you would invest 63,460 in LVMH Mot Hennessy on November 5, 2024 and sell it today you would earn a total of 6,890 from holding LVMH Mot Hennessy or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Airbus Group SE
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Airbus Group SE |
LVMH Mot and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and Airbus Group
The main advantage of trading using opposite LVMH Mot and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, Airbus 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| LVMH Mot vs. Kering SA | LVMH Mot vs. Hermes International SCA | LVMH Mot vs. LOreal SA | LVMH Mot vs. Air Liquide SA |
| Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM SA |
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.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |