Correlation Between Splash Beverage and LVMH Moet
Can any of the company-specific risk be diversified away by investing in both Splash Beverage and LVMH Moet 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 Splash Beverage and LVMH Moet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Splash Beverage Group and LVMH Moet Hennessy, you can compare the effects of market volatilities on Splash Beverage and LVMH Moet 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 Splash Beverage with a short position of LVMH Moet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Splash Beverage and LVMH Moet.
Diversification Opportunities for Splash Beverage and LVMH Moet
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Splash and LVMH is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Splash Beverage Group and LVMH Moet Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Moet Hennessy and Splash Beverage 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 Splash Beverage Group are associated (or correlated) with LVMH Moet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Moet Hennessy has no effect on the direction of Splash Beverage i.e., Splash Beverage and LVMH Moet go up and down completely randomly.
Pair Corralation between Splash Beverage and LVMH Moet
Given the investment horizon of 90 days Splash Beverage Group is expected to under-perform the LVMH Moet. In addition to that, Splash Beverage is 3.62 times more volatile than LVMH Moet Hennessy. It trades about -0.02 of its total potential returns per unit of risk. LVMH Moet Hennessy is currently generating about 0.2 per unit of volatility. If you would invest 14,911 in LVMH Moet Hennessy on August 27, 2024 and sell it today you would earn a total of 2,284 from holding LVMH Moet Hennessy or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.07% |
| Values | Daily Returns |
Splash Beverage Group vs. LVMH Moet Hennessy
Performance |
| Timeline |
| Splash Beverage Group |
| LVMH Moet Hennessy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Splash Beverage and LVMH Moet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Splash Beverage and LVMH Moet
The main advantage of trading using opposite Splash Beverage and LVMH Moet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Splash Beverage position performs unexpectedly, LVMH Moet 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 Moet will offset losses from the drop in LVMH Moet's long position.| Splash Beverage vs. Andrew Peller Limited | Splash Beverage vs. Naked Wines plc | Splash Beverage vs. Willamette Valley Vineyards | Splash Beverage vs. Naked Wines plc |
| LVMH Moet vs. Hermes International SA | LVMH Moet vs. Hermes International SCA | LVMH Moet vs. Kering SA | LVMH Moet vs. Capri Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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