Correlation Between Swatch Group and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Swatch Group 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 Swatch Group and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Swatch Group and LVMH Mot Hennessy, you can compare the effects of market volatilities on Swatch Group 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 Swatch Group with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swatch Group and LVMH Mot.
Diversification Opportunities for Swatch Group and LVMH Mot
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Swatch and LVMH is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding The Swatch Group 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 The Swatch Group 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 Swatch Group i.e., Swatch Group and LVMH Mot go up and down completely randomly.
Pair Corralation between Swatch Group and LVMH Mot
Assuming the 90 days trading horizon The Swatch Group is expected to generate 1.6 times more return on investment than LVMH Mot. However, Swatch Group is 1.6 times more volatile than LVMH Mot Hennessy. It trades about -0.01 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.04 per unit of risk. If you would invest 993.00 in The Swatch Group on October 14, 2024 and sell it today you would lose (193.00) from holding The Swatch Group or give up 19.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
The Swatch Group vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Swatch Group |
| LVMH Mot Hennessy |
Swatch Group and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swatch Group and LVMH Mot
The main advantage of trading using opposite Swatch Group and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swatch Group 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.| Swatch Group vs. LVMH Mot Hennessy | Swatch Group vs. LVMH Mot Hennessy | Swatch Group vs. LVMH Mot Hennessy | Swatch Group vs. Herms International Socit |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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