Correlation Between Compagnie Financiere and LVMH Moet

Can any of the company-specific risk be diversified away by investing in both Compagnie Financiere and LVMH Moet 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 Compagnie Financiere and LVMH Moet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compagnie Financiere Richemont and LVMH Moet Hennessy, you can compare the effects of market volatilities on Compagnie Financiere and LVMH Moet 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 Compagnie Financiere with a short position of LVMH Moet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financiere and LVMH Moet.

Diversification Opportunities for Compagnie Financiere and LVMH Moet

-0.17

Correlation Coefficient

Compagnie Financiere  LVMH Moet

Good diversification

The 3 months correlation between Compagnie and LVMH is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financiere Richemont and LVMH Moet Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Moet Hennessy and Compagnie Financiere 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 Compagnie Financiere Richemont are associated (or correlated) with LVMH Moet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Moet Hennessy has no effect on the direction of Compagnie Financiere i.e., Compagnie Financiere and LVMH Moet go up and down completely randomly.

Pair Corralation between Compagnie Financiere and LVMH Moet

If you would invest  17,195  in LVMH Moet Hennessy on August 30, 2024 and sell it today you would earn a total of  0.00  from holding LVMH Moet Hennessy or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Compagnie Financiere Richemont  vs.  LVMH Moet Hennessy

Compagnie Financiere

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Financiere Richemont has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

LVMH Moet Hennessy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LVMH Moet Hennessy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, LVMH Moet is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Compagnie Financiere and LVMH Moet

The main advantage of trading using opposite Compagnie Financiere and LVMH Moet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financiere position performs unexpectedly, LVMH Moet 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 Moet will offset losses from the drop in LVMH Moet's long position.

The idea behind Compagnie Financiere Richemont and LVMH Moet Hennessy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.