Correlation Between LVMH Mot and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both LVMH Mot and LVMH Moët 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 LVMH Moët 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 LVMH Mot Hennessy, you can compare the effects of market volatilities on LVMH Mot and LVMH Moët 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 LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Mot and LVMH Moët.
Diversification Opportunities for LVMH Mot and LVMH Moët
Very poor diversification
The 3 months correlation between LVMH and LVMH is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Moët. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of LVMH Mot i.e., LVMH Mot and LVMH Moët go up and down completely randomly.
Pair Corralation between LVMH Mot and LVMH Moët
Assuming the 90 days trading horizon LVMH Mot is expected to generate 1.35 times less return on investment than LVMH Moët. But when comparing it to its historical volatility, LVMH Mot Hennessy is 2.12 times less risky than LVMH Moët. It trades about 0.23 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 11,384 in LVMH Mot Hennessy on September 25, 2024 and sell it today you would earn a total of 1,016 from holding LVMH Mot Hennessy or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. LVMH Mot Hennessy
Performance |
| Timeline |
| LVMH Mot Hennessy |
| LVMH Mot Hennessy |
LVMH Mot and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Mot and LVMH Moët
The main advantage of trading using opposite LVMH Mot and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Mot position performs unexpectedly, LVMH Moët 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 LVMH Moët will offset losses from the drop in LVMH Moët's long position.| LVMH Mot vs. Herms International Socit | LVMH Mot vs. CHRISTIAN DIOR ADR14EO2 | LVMH Mot vs. Christian Dior SE | LVMH Mot vs. The Swatch Group |
| LVMH Moët vs. LVMH Mot Hennessy | LVMH Moët vs. Herms International Socit | LVMH Moët vs. CHRISTIAN DIOR ADR14EO2 | LVMH Moët vs. Christian Dior SE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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