Correlation Between LVMH Mot and Enogia SAS
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and Enogia SAS 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 Enogia SAS 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 Enogia SAS, you can compare the effects of market volatilities on LVMH Mot and Enogia SAS 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 Enogia SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and Enogia SAS.
Diversification Opportunities for LVMH Mot and Enogia SAS
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LVMH and Enogia is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Enogia SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enogia SAS 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 Enogia SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enogia SAS has no effect on the direction of LVMH Mot i.e., LVMH Mot and Enogia SAS go up and down completely randomly.
Pair Corralation between LVMH Mot and Enogia SAS
Assuming the 90 days horizon LVMH Mot Hennessy is expected to generate 1.67 times more return on investment than Enogia SAS. However, LVMH Mot is 1.67 times more volatile than Enogia SAS. It trades about -0.2 of its potential returns per unit of risk. Enogia SAS is currently generating about -0.37 per unit of risk. If you would invest 62,700 in LVMH Mot Hennessy on August 26, 2024 and sell it today you would lose (4,400) from holding LVMH Mot Hennessy or give up 7.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Enogia SAS
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Enogia SAS |
LVMH Mot and Enogia SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and Enogia SAS
The main advantage of trading using opposite LVMH Mot and Enogia SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, Enogia SAS 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 Enogia SAS will offset losses from the drop in Enogia SAS'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 |
| Enogia SAS vs. LVMH Mot Hennessy | Enogia SAS vs. LOreal SA | Enogia SAS vs. Hermes International SCA | Enogia SAS vs. Manitou BF 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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