Correlation Between Visa and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and LVMH Mot Hennessy, you can compare the effects of market volatilities on Visa 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 Visa with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and LVMH Mot.
Diversification Opportunities for Visa and LVMH Mot
Weak diversification
The 3 months correlation between Visa and LVMH is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and LVMH Mot go up and down completely randomly.
Pair Corralation between Visa and LVMH Mot
Taking into account the 90-day investment horizon Visa is expected to generate 1.07 times less return on investment than LVMH Mot. But when comparing it to its historical volatility, Visa Class A is 1.83 times less risky than LVMH Mot. It trades about 0.25 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 62,445 in LVMH Mot Hennessy on October 29, 2024 and sell it today you would earn a total of 10,915 from holding LVMH Mot Hennessy or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.36% |
| Values | Daily Returns |
Visa Class A vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Visa Class A |
| LVMH Mot Hennessy |
Visa and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and LVMH Mot
The main advantage of trading using opposite Visa and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| LVMH Mot vs. CARSALESCOM | LVMH Mot vs. Stag Industrial | LVMH Mot vs. Canon Marketing Japan | LVMH Mot vs. MCEWEN MINING INC |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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