Correlation Between LVMH Mot and NicOx SA
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and NicOx 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 Mot and NicOx 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 NicOx SA, you can compare the effects of market volatilities on LVMH Mot and NicOx 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 Mot with a short position of NicOx SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and NicOx SA.
Diversification Opportunities for LVMH Mot and NicOx SA
Poor diversification
The 3 months correlation between LVMH and NicOx is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and NicOx SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NicOx SA 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 NicOx SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NicOx SA has no effect on the direction of LVMH Mot i.e., LVMH Mot and NicOx SA go up and down completely randomly.
Pair Corralation between LVMH Mot and NicOx SA
Assuming the 90 days horizon LVMH Mot Hennessy is expected to generate 0.34 times more return on investment than NicOx SA. However, LVMH Mot Hennessy is 2.91 times less risky than NicOx SA. It trades about 0.0 of its potential returns per unit of risk. NicOx SA is currently generating about -0.03 per unit of risk. If you would invest 67,290 in LVMH Mot Hennessy on September 19, 2024 and sell it today you would lose (3,640) from holding LVMH Mot Hennessy or give up 5.41% 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. NicOx SA
Performance |
| Timeline |
| LVMH Mot Hennessy |
| NicOx SA |
LVMH Mot and NicOx SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and NicOx SA
The main advantage of trading using opposite LVMH Mot and NicOx SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, NicOx 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 NicOx SA will offset losses from the drop in NicOx SA'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 |
| NicOx SA vs. Sartorius Stedim Biotech | NicOx SA vs. Axway Software | NicOx SA vs. Broadpeak SA | NicOx SA vs. Entech SE SAS |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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