Correlation Between LVMH Moët and Maple Leaf
Can any of the company-specific risk be diversified away by investing in both LVMH Moët and Maple Leaf 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 Maple Leaf 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 Maple Leaf Foods, you can compare the effects of market volatilities on LVMH Moët and Maple Leaf 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 Maple Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of LVMH Moët and Maple Leaf.
Diversification Opportunities for LVMH Moët and Maple Leaf
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LVMH and Maple is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and Maple Leaf Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Leaf Foods 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 Maple Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Leaf Foods has no effect on the direction of LVMH Moët i.e., LVMH Moët and Maple Leaf go up and down completely randomly.
Pair Corralation between LVMH Moët and Maple Leaf
Assuming the 90 days trading horizon LVMH Mot Hennessy is expected to generate 1.67 times more return on investment than Maple Leaf. However, LVMH Moët is 1.67 times more volatile than Maple Leaf Foods. It trades about 0.07 of its potential returns per unit of risk. Maple Leaf Foods is currently generating about 0.08 per unit of risk. If you would invest 12,800 in LVMH Mot Hennessy on November 6, 2024 and sell it today you would earn a total of 500.00 from holding LVMH Mot Hennessy or generate 3.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LVMH Mot Hennessy vs. Maple Leaf Foods
Performance |
| Timeline |
| LVMH Mot Hennessy |
| Maple Leaf Foods |
LVMH Moët and Maple Leaf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LVMH Moët and Maple Leaf
The main advantage of trading using opposite LVMH Moët and Maple Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LVMH Moët position performs unexpectedly, Maple Leaf 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 Maple Leaf will offset losses from the drop in Maple Leaf's long position.| LVMH Moët vs. LVMH Mot Hennessy | LVMH Moët vs. LVMH Mot Hennessy | LVMH Moët vs. Herms International Socit | LVMH Moët vs. CHRISTIAN DIOR ADR14EO2 |
| Maple Leaf vs. China Communications Services | Maple Leaf vs. Zoom Video Communications | Maple Leaf vs. Spirent Communications plc | Maple Leaf vs. Austevoll Seafood ASA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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