Correlation Between LVMH Mot and Herms International
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and Herms International 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 Herms International 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 Herms International Socit, you can compare the effects of market volatilities on LVMH Mot and Herms International 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 Herms International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and Herms International.
Diversification Opportunities for LVMH Mot and Herms International
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LVMH and Herms is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit 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 Herms International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of LVMH Mot i.e., LVMH Mot and Herms International go up and down completely randomly.
Pair Corralation between LVMH Mot and Herms International
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Herms International. But the stock apears to be less risky and, when comparing its historical volatility, LVMH Mot Hennessy is 1.06 times less risky than Herms International. The stock trades about -0.01 of its potential returns per unit of risk. The Herms International Socit is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 152,537 in Herms International Socit on September 26, 2024 and sell it today you would earn a total of 78,763 from holding Herms International Socit or generate 51.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Herms International Socit
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Herms International Socit |
LVMH Mot and Herms International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and Herms International
The main advantage of trading using opposite LVMH Mot and Herms International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, Herms International 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 Herms International will offset losses from the drop in Herms International's long position.| LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. Herms International Socit | LVMH Mot vs. CHRISTIAN DIOR ADR14EO2 | LVMH Mot vs. Christian Dior SE |
| Herms International vs. LVMH Mot Hennessy | Herms International vs. CHRISTIAN DIOR ADR14EO2 | Herms International vs. Christian Dior SE | Herms International vs. The Swatch Group |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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