Correlation Between LVMH Mot and Aramis SAS
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and Aramis 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 Aramis 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 Aramis SAS, you can compare the effects of market volatilities on LVMH Mot and Aramis 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 Aramis SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and Aramis SAS.
Diversification Opportunities for LVMH Mot and Aramis SAS
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LVMH and Aramis is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Aramis SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramis 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 Aramis SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramis SAS has no effect on the direction of LVMH Mot i.e., LVMH Mot and Aramis SAS go up and down completely randomly.
Pair Corralation between LVMH Mot and Aramis SAS
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Aramis SAS. But the stock apears to be less risky and, when comparing its historical volatility, LVMH Mot Hennessy is 1.24 times less risky than Aramis SAS. The stock trades about -0.17 of its potential returns per unit of risk. The Aramis SAS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 602.00 in Aramis SAS on August 24, 2024 and sell it today you would earn a total of 50.00 from holding Aramis SAS or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Aramis SAS
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Aramis SAS |
LVMH Mot and Aramis SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and Aramis SAS
The main advantage of trading using opposite LVMH Mot and Aramis SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, Aramis 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 Aramis SAS will offset losses from the drop in Aramis 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 |
| Aramis SAS vs. LVMH Mot Hennessy | Aramis SAS vs. LOreal SA | Aramis SAS vs. Hermes International SCA | Aramis 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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