Correlation Between KERINGUNSPADR 110 and LVMH Mot

Can any of the company-specific risk be diversified away by investing in both KERINGUNSPADR 110 and LVMH Mot 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 KERINGUNSPADR 110 and LVMH Mot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KERINGUNSPADR 110 EO and LVMH Mot Hennessy, you can compare the effects of market volatilities on KERINGUNSPADR 110 and LVMH Mot 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 KERINGUNSPADR 110 with a short position of LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of KERINGUNSPADR 110 and LVMH Mot.

Diversification Opportunities for KERINGUNSPADR 110 and LVMH Mot

0.83

Correlation Coefficient

KERINGUNSPADR 110  LVMH Mot

Very poor diversification

The 3 months correlation between KERINGUNSPADR and LVMH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding KERINGUNSPADR 110 EO 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 KERINGUNSPADR 110 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 KERINGUNSPADR 110 EO are associated (or correlated) with LVMH Mot. 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 KERINGUNSPADR 110 i.e., KERINGUNSPADR 110 and LVMH Mot go up and down completely randomly.

Pair Corralation between KERINGUNSPADR 110 and LVMH Mot

Assuming the 90 days trading horizon KERINGUNSPADR 110 EO is expected to generate 1.55 times more return on investment than LVMH Mot. However, KERINGUNSPADR 110 is 1.55 times more volatile than LVMH Mot Hennessy. It trades about 0.2 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.24 per unit of risk. If you would invest  2,080  in KERINGUNSPADR 110 EO on September 23, 2024 and sell it today you would earn a total of  220.00  from holding KERINGUNSPADR 110 EO or generate 10.58% return on investment over 90 days.

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

KERINGUNSPADR 110 EO  vs.  LVMH Mot Hennessy

KERINGUNSPADR 110

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KERINGUNSPADR 110 EO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, KERINGUNSPADR 110 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LVMH Mot Hennessy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LVMH Mot may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KERINGUNSPADR 110 and LVMH Mot

The main advantage of trading using opposite KERINGUNSPADR 110 and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KERINGUNSPADR 110 position performs unexpectedly, LVMH Mot 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 Mot will offset losses from the drop in LVMH Mot's long position.

The idea behind KERINGUNSPADR 110 EO 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.