Correlation Between Ford and Lazard Capital
Can any of the company-specific risk be diversified away by investing in both Ford and Lazard Capital 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 Ford and Lazard Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Lazard Capital Allocator, you can compare the effects of market volatilities on Ford and Lazard Capital 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 Ford with a short position of Lazard Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lazard Capital.
Diversification Opportunities for Ford and Lazard Capital
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ford and Lazard is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lazard Capital Allocator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Capital Allocator and Ford 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 Ford Motor are associated (or correlated) with Lazard Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Capital Allocator has no effect on the direction of Ford i.e., Ford and Lazard Capital go up and down completely randomly.
Pair Corralation between Ford and Lazard Capital
Taking into account the 90-day investment horizon Ford Motor is expected to generate 3.15 times more return on investment than Lazard Capital. However, Ford is 3.15 times more volatile than Lazard Capital Allocator. It trades about 0.25 of its potential returns per unit of risk. Lazard Capital Allocator is currently generating about 0.34 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Lazard Capital Allocator
Performance |
| Timeline |
| Ford Motor |
| Lazard Capital Allocator |
Ford and Lazard Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lazard Capital
The main advantage of trading using opposite Ford and Lazard Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lazard Capital 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 Capital will offset losses from the drop in Lazard Capital's long position.The idea behind Ford Motor and Lazard Capital Allocator 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 Capital vs. Cullen International High | Lazard Capital vs. Cullen High Dividend | Lazard Capital vs. Lazard International Equity | Lazard Capital vs. The Arbitrage Event Driven |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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