Correlation Between BNPP BONDSRI and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both BNPP BONDSRI 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 BNPP BONDSRI and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNPP BONDSRI ETF and LVMH Mot Hennessy, you can compare the effects of market volatilities on BNPP BONDSRI 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 BNPP BONDSRI with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNPP BONDSRI and LVMH Mot.
Diversification Opportunities for BNPP BONDSRI and LVMH Mot
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BNPP and LVMH is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BNPP BONDSRI ETF 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 BNPP BONDSRI 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 BNPP BONDSRI ETF 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 BNPP BONDSRI i.e., BNPP BONDSRI and LVMH Mot go up and down completely randomly.
Pair Corralation between BNPP BONDSRI and LVMH Mot
Assuming the 90 days trading horizon BNPP BONDSRI ETF is expected to under-perform the LVMH Mot. But the etf apears to be less risky and, when comparing its historical volatility, BNPP BONDSRI ETF is 9.46 times less risky than LVMH Mot. The etf trades about -0.06 of its potential returns per unit of risk. The LVMH Mot Hennessy is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 58,462 in LVMH Mot Hennessy on September 28, 2024 and sell it today you would earn a total of 5,098 from holding LVMH Mot Hennessy or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BNPP BONDSRI ETF vs. LVMH Mot Hennessy
Performance |
| Timeline |
| BNPP BONDSRI ETF |
| LVMH Mot Hennessy |
BNPP BONDSRI and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNPP BONDSRI and LVMH Mot
The main advantage of trading using opposite BNPP BONDSRI and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNPP BONDSRI 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.| BNPP BONDSRI vs. Lyxor UCITS Japan | BNPP BONDSRI vs. Lyxor UCITS Japan | BNPP BONDSRI vs. Lyxor UCITS Stoxx | BNPP BONDSRI vs. Amundi CAC 40 |
| LVMH Mot vs. Kering SA | LVMH Mot vs. Hermes International SCA | LVMH Mot vs. LOreal SA | LVMH Mot vs. Air Liquide SA |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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