Correlation Between FactSet Research and LVMH Moët

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

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

Diversification Opportunities for FactSet Research and LVMH Moët

-0.69

Correlation Coefficient

FactSet Research  LVMH Moët

Excellent diversification

The 3 months correlation between FactSet and LVMH is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding FactSet Research Systems 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 FactSet Research 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 FactSet Research Systems 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 FactSet Research i.e., FactSet Research and LVMH Moët go up and down completely randomly.

Pair Corralation between FactSet Research and LVMH Moët

Considering the 90-day investment horizon FactSet Research Systems is expected to generate 0.48 times more return on investment than LVMH Moët. However, FactSet Research Systems is 2.1 times less risky than LVMH Moët. It trades about 0.19 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about -0.08 per unit of risk. If you would invest  42,574  in FactSet Research Systems on September 2, 2024 and sell it today you would earn a total of  6,493  from holding FactSet Research Systems or generate 15.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FactSet Research Systems  vs.  LVMH Mot Hennessy

FactSet Research Systems

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FactSet Research Systems are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, FactSet Research unveiled solid returns over the last few months and may actually be approaching a breakup point.

LVMH Mot Hennessy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LVMH Mot Hennessy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with FactSet Research and LVMH Moët

The main advantage of trading using opposite FactSet Research and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FactSet Research 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.

The idea behind FactSet Research Systems and LVMH Mot 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.