Correlation Between LVMH Moët and National Beverage
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and National Beverage 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 National Beverage 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 National Beverage Corp, you can compare the effects of market volatilities on LVMH Moët and National Beverage 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 National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and National Beverage.
Diversification Opportunities for LVMH Moët and National Beverage
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LVMH and National is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp 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 National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of LVMH Moët i.e., LVMH Moët and National Beverage go up and down completely randomly.
Pair Corralation between LVMH Moët and National Beverage
Assuming the 90 days trading horizon LVMH Mot Hennessy is expected to generate 1.01 times more return on investment than National Beverage. However, LVMH Moët is 1.01 times more volatile than National Beverage Corp. It trades about 0.1 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.2 per unit of risk. If you would invest 63,140 in LVMH Mot Hennessy on October 16, 2024 and sell it today you would earn a total of 1,480 from holding LVMH Mot Hennessy or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. National Beverage Corp
Performance |
| Timeline |
| LVMH Mot Hennessy |
| National Beverage Corp |
LVMH Moët and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moët and National Beverage
The main advantage of trading using opposite LVMH Moët and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| LVMH Moët vs. National Beverage Corp | LVMH Moët vs. GWILLI FOOD | LVMH Moët vs. MOLSON RS BEVERAGE | LVMH Moët vs. CN MODERN DAIRY |
| National Beverage vs. American Homes 4 | National Beverage vs. Siamgas And Petrochemicals | National Beverage vs. KENEDIX OFFICE INV | National Beverage vs. DAIRY FARM INTL |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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