Correlation Between LVMH Moët and Hermès International
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and Hermès 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 Moët and Hermès 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 Moët and Hermès 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 Moët with a short position of Hermès International. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and Hermès International.
Diversification Opportunities for LVMH Moët and Hermès International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LVMH and Hermès is 0.67. 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 Moët 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 Hermès 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 Moët i.e., LVMH Moët and Hermès International go up and down completely randomly.
Pair Corralation between LVMH Moët and Hermès International
Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the Hermès International. But the stock apears to be less risky and, when comparing its historical volatility, LVMH Mot Hennessy is 1.07 times less risky than Hermès International. The stock trades about -0.02 of its potential returns per unit of risk. The Herms International Socit is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 162,904 in Herms International Socit on October 14, 2024 and sell it today you would earn a total of 74,396 from holding Herms International Socit or generate 45.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Herms International Socit
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Herms International Socit |
LVMH Moët and Hermès International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moët and Hermès International
The main advantage of trading using opposite LVMH Moët and Hermès International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, Hermès 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 Hermès International will offset losses from the drop in Hermès International's long position.| LVMH Moët vs. Dentsply Sirona | LVMH Moët vs. SAFEROADS HLDGS | LVMH Moët vs. NAGOYA RAILROAD | LVMH Moët vs. Texas Roadhouse |
| Hermès International vs. LVMH Mot Hennessy | Hermès International vs. LVMH Mot Hennessy | Hermès International vs. LVMH Mot Hennessy | Hermès International vs. CHRISTIAN DIOR ADR14EO2 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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