Correlation Between Swatch Group and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both Swatch Group 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 Swatch Group and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swatch Group AG and LVMH Mot Hennessy, you can compare the effects of market volatilities on Swatch Group 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 Swatch Group with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and LVMH Moët.
Diversification Opportunities for Swatch Group and LVMH Moët
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Swatch and LVMH is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Swatch Group AG 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 Swatch Group 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 Swatch Group AG 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 Swatch Group i.e., Swatch Group and LVMH Moët go up and down completely randomly.
Pair Corralation between Swatch Group and LVMH Moët
Assuming the 90 days horizon Swatch Group AG is expected to generate 1.06 times more return on investment than LVMH Moët. However, Swatch Group is 1.06 times more volatile than LVMH Mot Hennessy. It trades about -0.05 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.09 per unit of risk. If you would invest 1,019 in Swatch Group AG on August 31, 2024 and sell it today you would lose (112.00) from holding Swatch Group AG or give up 10.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swatch Group AG vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Swatch Group AG |
| LVMH Mot Hennessy |
Swatch Group and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch Group and LVMH Moët
The main advantage of trading using opposite Swatch Group and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group 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.| Swatch Group vs. Kering SA | Swatch Group vs. Burberry Group Plc | Swatch Group vs. Prada Spa PK | Swatch Group vs. Compagnie Financire Richemont |
| LVMH Moët vs. Hermes International SA | LVMH Moët vs. Kering SA | LVMH Moët vs. Capri Holdings | LVMH Moët vs. Tapestry |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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