Correlation Between LVMH Mot and Stellantis
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and Stellantis 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 Stellantis 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 Stellantis NV, you can compare the effects of market volatilities on LVMH Mot and Stellantis 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 Stellantis. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and Stellantis.
Diversification Opportunities for LVMH Mot and Stellantis
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LVMH and Stellantis is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Stellantis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellantis NV 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 Stellantis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellantis NV has no effect on the direction of LVMH Mot i.e., LVMH Mot and Stellantis go up and down completely randomly.
Pair Corralation between LVMH Mot and Stellantis
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Stellantis. But the stock apears to be less risky and, when comparing its historical volatility, LVMH Mot Hennessy is 1.11 times less risky than Stellantis. The stock trades about -0.19 of its potential returns per unit of risk. The Stellantis NV is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Stellantis NV on August 30, 2024 and sell it today you would lose (27.00) from holding Stellantis NV or give up 2.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Stellantis NV
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Stellantis NV |
LVMH Mot and Stellantis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and Stellantis
The main advantage of trading using opposite LVMH Mot and Stellantis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, Stellantis 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 Stellantis will offset losses from the drop in Stellantis' long position.| LVMH Mot vs. Kering SA | LVMH Mot vs. Hermes International SCA | LVMH Mot vs. LOreal SA | LVMH Mot vs. Air Liquide SA |
| Stellantis vs. LVMH Mot Hennessy | Stellantis vs. LOreal SA | Stellantis vs. Hermes International SCA | Stellantis 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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