Correlation Between United Natural and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and LVMH Mot Hennessy, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and LVMH Mot.
Diversification Opportunities for United Natural and LVMH Mot
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and LVMH is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods 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 United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and LVMH Mot go up and down completely randomly.
Pair Corralation between United Natural and LVMH Mot
Assuming the 90 days horizon United Natural Foods is expected to generate 1.78 times more return on investment than LVMH Mot. However, United Natural is 1.78 times more volatile than LVMH Mot Hennessy. It trades about 0.1 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 2,655 in United Natural Foods on October 15, 2024 and sell it today you would earn a total of 96.00 from holding United Natural Foods or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. LVMH Mot Hennessy
Performance |
| Timeline |
| United Natural Foods |
| LVMH Mot Hennessy |
United Natural and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and LVMH Mot
The main advantage of trading using opposite United Natural and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. CyberArk Software | United Natural vs. MAGIC SOFTWARE ENTR | United Natural vs. Easy Software AG | United Natural vs. SWISS WATER DECAFFCOFFEE |
| LVMH Mot vs. MINCO SILVER | LVMH Mot vs. ANGLO ASIAN MINING | LVMH Mot vs. United Natural Foods | LVMH Mot vs. Tyson Foods |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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