Correlation Between LVMH Moët and Dow Jones
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on LVMH Moët and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and Dow Jones.
Diversification Opportunities for LVMH Moët and Dow Jones
Excellent diversification
The 3 months correlation between LVMH and Dow is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of LVMH Moët i.e., LVMH Moët and Dow Jones go up and down completely randomly.
Pair Corralation between LVMH Moët and Dow Jones
Assuming the 90 days trading horizon LVMH Mot Hennessy is expected to generate 2.03 times more return on investment than Dow Jones. However, LVMH Moët is 2.03 times more volatile than Dow Jones Industrial. It trades about 0.05 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.02 per unit of risk. If you would invest 61,950 in LVMH Mot Hennessy on October 15, 2024 and sell it today you would earn a total of 2,530 from holding LVMH Mot Hennessy or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.77% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Dow Jones Industrial
Performance |
| Timeline |
LVMH Moët and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
LVMH Mot Hennessy
Pair trading matchups for LVMH Moët
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with LVMH Moët and Dow Jones
The main advantage of trading using opposite LVMH Moët and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| LVMH Moët vs. Liberty Broadband | LVMH Moët vs. TRAINLINE PLC LS | LVMH Moët vs. The Home Depot | LVMH Moët vs. Texas Roadhouse |
| Dow Jones vs. LB Foster | Dow Jones vs. Definitive Healthcare Corp | Dow Jones vs. TFI International | Dow Jones vs. Ryanair Holdings PLC |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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