Correlation Between LVMH Mot and BNPP BONDSRI

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

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

Diversification Opportunities for LVMH Mot and BNPP BONDSRI

-0.02

Correlation Coefficient

LVMH Mot  BNPP BONDSRI

Good diversification

The 3 months correlation between LVMH and BNPP is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding LVMH Mot Hennessy and BNPP BONDSRI ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNPP BONDSRI ETF and LVMH Mot 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 LVMH Mot Hennessy are associated (or correlated) with BNPP BONDSRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNPP BONDSRI ETF has no effect on the direction of LVMH Mot i.e., LVMH Mot and BNPP BONDSRI go up and down completely randomly.

Pair Corralation between LVMH Mot and BNPP BONDSRI

Assuming the 90 days horizon LVMH Mot Hennessy is expected to under-perform the BNPP BONDSRI. In addition to that, LVMH Mot is 4.82 times more volatile than BNPP BONDSRI ETF. It trades about -0.01 of its total potential returns per unit of risk. BNPP BONDSRI ETF is currently generating about 0.04 per unit of volatility. If you would invest  882.00  in BNPP BONDSRI ETF on September 27, 2024 and sell it today you would earn a total of  66.00  from holding BNPP BONDSRI ETF or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

LVMH Mot Hennessy  vs.  BNPP BONDSRI ETF

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 latest weak 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.

BNPP BONDSRI ETF

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BNPP BONDSRI ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, BNPP BONDSRI is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with LVMH Mot and BNPP BONDSRI

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

The idea behind LVMH Mot Hennessy and BNPP BONDSRI ETF 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.