Correlation Between Commonwealth Australia/new and Lazard Emerging
Can any of the company-specific risk be diversified away by investing in both Commonwealth Australia/new 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 Commonwealth Australia/new and Lazard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Australianew Zealand and Lazard Emerging Markets, you can compare the effects of market volatilities on Commonwealth Australia/new 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 Commonwealth Australia/new with a short position of Lazard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Australia/new and Lazard Emerging.
Diversification Opportunities for Commonwealth Australia/new and Lazard Emerging
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Commonwealth and Lazard is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Australianew Zeal 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 Commonwealth Australia/new 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 Commonwealth Australianew Zealand 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 Commonwealth Australia/new i.e., Commonwealth Australia/new and Lazard Emerging go up and down completely randomly.
Pair Corralation between Commonwealth Australia/new and Lazard Emerging
Assuming the 90 days horizon Commonwealth Australianew Zealand is expected to under-perform the Lazard Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Commonwealth Australianew Zealand is 1.07 times less risky than Lazard Emerging. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Lazard Emerging Markets is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,064 in Lazard Emerging Markets on August 29, 2024 and sell it today you would earn a total of 143.00 from holding Lazard Emerging Markets or generate 13.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Australianew Zeal vs. Lazard Emerging Markets
Performance |
| Timeline |
| Commonwealth Australia/new |
| Lazard Emerging Markets |
Commonwealth Australia/new and Lazard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Australia/new and Lazard Emerging
The main advantage of trading using opposite Commonwealth Australia/new and Lazard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Australia/new 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.The idea behind Commonwealth Australianew Zealand and Lazard Emerging Markets 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.
| Lazard Emerging vs. Vanguard Emerging Markets | Lazard Emerging vs. Vanguard Emerging Markets | 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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