Correlation Between Burberry Group and LVMH Moet

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

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

Diversification Opportunities for Burberry Group and LVMH Moet

0.0

Correlation Coefficient

Burberry Group  LVMH Moet

Pay attention - limited upside

The 3 months correlation between Burberry and LVMH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Burberry Group Plc 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 Burberry Group 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 Burberry Group Plc 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 Burberry Group i.e., Burberry Group and LVMH Moet go up and down completely randomly.

Pair Corralation between Burberry Group and LVMH Moet

If you would invest (100.00) in LVMH Moet Hennessy on December 29, 2024 and sell it today you would earn a total of  100.00  from holding LVMH Moet Hennessy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Burberry Group Plc  vs.  LVMH Moet Hennessy

Burberry Group Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Burberry Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers 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

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 Burberry Group and LVMH Moet

The main advantage of trading using opposite Burberry Group and LVMH Moet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burberry Group 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 Burberry Group Plc 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 CEOs Directory module to screen CEOs from public companies around the world.