Correlation Between VIENNA INSURANCE and LVMH Moët

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

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

Diversification Opportunities for VIENNA INSURANCE and LVMH Moët

0.64

Correlation Coefficient

VIENNA INSURANCE  LVMH Moët

Poor diversification

The 3 months correlation between VIENNA and LVMH is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding VIENNA INSURANCE GR 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 VIENNA INSURANCE 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 VIENNA INSURANCE GR 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 VIENNA INSURANCE i.e., VIENNA INSURANCE and LVMH Moët go up and down completely randomly.

Pair Corralation between VIENNA INSURANCE and LVMH Moët

Assuming the 90 days trading horizon VIENNA INSURANCE is expected to generate 4.6 times less return on investment than LVMH Moët. But when comparing it to its historical volatility, VIENNA INSURANCE GR is 7.09 times less risky than LVMH Moët. It trades about 0.34 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  62,890  in LVMH Mot Hennessy on October 22, 2024 and sell it today you would earn a total of  6,110  from holding LVMH Mot Hennessy or generate 9.72% return on investment over 90 days.

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

VIENNA INSURANCE GR  vs.  LVMH Mot Hennessy

VIENNA INSURANCE

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VIENNA INSURANCE GR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, VIENNA INSURANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

LVMH Mot Hennessy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LVMH Mot Hennessy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, LVMH Moët unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VIENNA INSURANCE and LVMH Moët

The main advantage of trading using opposite VIENNA INSURANCE and LVMH Moët positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIENNA INSURANCE 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.

The idea behind VIENNA INSURANCE GR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.