Correlation Between Pandora A/S and LVMH Moët
Can any of the company-specific risk be diversified away by investing in both Pandora A/S 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 Pandora A/S and LVMH Moët into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pandora AS and LVMH Mot Hennessy, you can compare the effects of market volatilities on Pandora A/S 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 Pandora A/S with a short position of LVMH Moët. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pandora A/S and LVMH Moët.
Diversification Opportunities for Pandora A/S and LVMH Moët
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pandora and LVMH is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pandora AS 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 Pandora A/S 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 Pandora AS 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 Pandora A/S i.e., Pandora A/S and LVMH Moët go up and down completely randomly.
Pair Corralation between Pandora A/S and LVMH Moët
Assuming the 90 days horizon Pandora AS is expected to generate 1.14 times more return on investment than LVMH Moët. However, Pandora A/S is 1.14 times more volatile than LVMH Mot Hennessy. It trades about 0.12 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.05 per unit of risk. If you would invest 4,365 in Pandora AS on January 26, 2024 and sell it today you would earn a total of 10,360 from holding Pandora AS or generate 237.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pandora AS vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Pandora A/S |
| LVMH Mot Hennessy |
Pandora A/S and LVMH Moët Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pandora A/S and LVMH Moët
The main advantage of trading using opposite Pandora A/S and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pandora A/S 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.| Pandora A/S vs. LVMH Mot Hennessy | Pandora A/S vs. Herms International Socit | Pandora A/S vs. The Swatch Group |
| LVMH Moët vs. LVMH Mot Hennessy | LVMH Moët vs. Herms International Socit | LVMH Moët vs. The Swatch Group |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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