Correlation Between NVIDIA and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both NVIDIA and LVMH Mot 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 NVIDIA and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVIDIA and LVMH Mot Hennessy, you can compare the effects of market volatilities on NVIDIA and LVMH Mot 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 NVIDIA with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and LVMH Mot.
Diversification Opportunities for NVIDIA and LVMH Mot
Very good diversification
The 3 months correlation between NVIDIA and LVMH is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA 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 NVIDIA 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 NVIDIA are associated (or correlated) with LVMH Mot. 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 NVIDIA i.e., NVIDIA and LVMH Mot go up and down completely randomly.
Pair Corralation between NVIDIA and LVMH Mot
Assuming the 90 days trading horizon NVIDIA is expected to generate 1.44 times more return on investment than LVMH Mot. However, NVIDIA is 1.44 times more volatile than LVMH Mot Hennessy. It trades about 0.15 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.01 per unit of risk. If you would invest 1,736 in NVIDIA on October 14, 2024 and sell it today you would earn a total of 11,520 from holding NVIDIA or generate 663.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVIDIA vs. LVMH Mot Hennessy
Performance |
| Timeline |
| NVIDIA |
| LVMH Mot Hennessy |
NVIDIA and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVIDIA and LVMH Mot
The main advantage of trading using opposite NVIDIA and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, LVMH Mot 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 Mot will offset losses from the drop in LVMH Mot's long position.| NVIDIA vs. IDP EDUCATION LTD | NVIDIA vs. TAL Education Group | NVIDIA vs. CAREER EDUCATION | NVIDIA vs. Mitsui Chemicals |
| LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. LVMH Mot Hennessy | LVMH Mot vs. Herms International Socit | LVMH Mot vs. CHRISTIAN DIOR ADR14EO2 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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