Correlation Between LVMH Mot and Pandora A/S
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and Pandora A/S 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 Pandora A/S 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 Pandora AS, you can compare the effects of market volatilities on LVMH Mot and Pandora A/S 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 Pandora A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and Pandora A/S.
Diversification Opportunities for LVMH Mot and Pandora A/S
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between LVMH and Pandora is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Pandora AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pandora A/S 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 Pandora A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pandora A/S has no effect on the direction of LVMH Mot i.e., LVMH Mot and Pandora A/S go up and down completely randomly.
Pair Corralation between LVMH Mot and Pandora A/S
Assuming the 90 days trading horizon LVMH Mot is expected to generate 1.96 times less return on investment than Pandora A/S. But when comparing it to its historical volatility, LVMH Mot Hennessy is 1.35 times less risky than Pandora A/S. It trades about 0.23 of its potential returns per unit of risk. Pandora AS is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 14,985 in Pandora AS on September 25, 2024 and sell it today you would earn a total of 2,035 from holding Pandora AS or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Pandora AS
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Pandora A/S |
LVMH Mot and Pandora A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and Pandora A/S
The main advantage of trading using opposite LVMH Mot and Pandora A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, Pandora A/S 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 Pandora A/S will offset losses from the drop in Pandora A/S's long position.| LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. Herms International Socit | LVMH Mot vs. CHRISTIAN DIOR ADR14EO2 |
| Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. Herms International Socit |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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