Correlation Between Ishares Municipal and Lazard Emerging
Can any of the company-specific risk be diversified away by investing in both Ishares Municipal and Lazard Emerging 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 Ishares Municipal and Lazard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ishares Municipal Bond and Lazard Emerging Markets, you can compare the effects of market volatilities on Ishares Municipal and Lazard Emerging 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 Ishares Municipal with a short position of Lazard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ishares Municipal and Lazard Emerging.
Diversification Opportunities for Ishares Municipal and Lazard Emerging
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ishares and Lazard is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ishares Municipal Bond and Lazard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Emerging Markets and Ishares Municipal 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 Ishares Municipal Bond are associated (or correlated) with Lazard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Emerging Markets has no effect on the direction of Ishares Municipal i.e., Ishares Municipal and Lazard Emerging go up and down completely randomly.
Pair Corralation between Ishares Municipal and Lazard Emerging
Assuming the 90 days horizon Ishares Municipal is expected to generate 3.25 times less return on investment than Lazard Emerging. But when comparing it to its historical volatility, Ishares Municipal Bond is 3.38 times less risky than Lazard Emerging. It trades about 0.07 of its potential returns per unit of risk. Lazard Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,568 in Lazard Emerging Markets on August 31, 2024 and sell it today you would earn a total of 310.00 from holding Lazard Emerging Markets or generate 19.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ishares Municipal Bond vs. Lazard Emerging Markets
Performance |
| Timeline |
| Ishares Municipal Bond |
| Lazard Emerging Markets |
Ishares Municipal and Lazard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ishares Municipal and Lazard Emerging
The main advantage of trading using opposite Ishares Municipal and Lazard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ishares Municipal position performs unexpectedly, Lazard Emerging 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 Lazard Emerging will offset losses from the drop in Lazard Emerging's long position.| Ishares Municipal vs. Allianzgi Technology Fund | Ishares Municipal vs. Goldman Sachs Technology | Ishares Municipal vs. Janus Global Technology | Ishares Municipal vs. Goldman Sachs Technology |
| Lazard Emerging vs. Pear Tree Polaris | Lazard Emerging vs. Artisan High Income | Lazard Emerging vs. HUMANA INC | Lazard Emerging vs. Aquagold International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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