Correlation Between Christian Dior and LVMH Moet

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

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

Diversification Opportunities for Christian Dior and LVMH Moet

0.0

Correlation Coefficient

Christian Dior  LVMH Moet

Pay attention - limited upside

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

Pair Corralation between Christian Dior and LVMH Moet

If you would invest  14,613  in Christian Dior SE on November 28, 2024 and sell it today you would earn a total of  2,669  from holding Christian Dior SE or generate 18.26% return on investment over 90 days.

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

Christian Dior SE  vs.  LVMH Moet Hennessy

Christian Dior SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Christian Dior showed solid returns over the last few months and may actually be approaching a breakup point.

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 Christian Dior and LVMH Moet

The main advantage of trading using opposite Christian Dior and LVMH Moet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Christian Dior 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 Christian Dior SE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.