Correlation Between Federated Institutional and Lazard Corporate
Can any of the company-specific risk be diversified away by investing in both Federated Institutional and Lazard Corporate 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 Federated Institutional and Lazard Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Institutional High and Lazard Corporate Income, you can compare the effects of market volatilities on Federated Institutional and Lazard Corporate 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 Federated Institutional with a short position of Lazard Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Lazard Corporate.
Diversification Opportunities for Federated Institutional and Lazard Corporate
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Federated and Lazard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High and Lazard Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Corporate Income and Federated Institutional 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 Federated Institutional High are associated (or correlated) with Lazard Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Corporate Income has no effect on the direction of Federated Institutional i.e., Federated Institutional and Lazard Corporate go up and down completely randomly.
Pair Corralation between Federated Institutional and Lazard Corporate
Assuming the 90 days horizon Federated Institutional High is expected to generate 0.99 times more return on investment than Lazard Corporate. However, Federated Institutional High is 1.01 times less risky than Lazard Corporate. It trades about 0.2 of its potential returns per unit of risk. Lazard Corporate Income is currently generating about 0.18 per unit of risk. If you would invest 848.00 in Federated Institutional High on September 3, 2024 and sell it today you would earn a total of 47.00 from holding Federated Institutional High or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Lazard Corporate Income
Performance |
| Timeline |
| Federated Institutional |
| Lazard Corporate Income |
Federated Institutional and Lazard Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Institutional and Lazard Corporate
The main advantage of trading using opposite Federated Institutional and Lazard Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional position performs unexpectedly, Lazard Corporate 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 Corporate will offset losses from the drop in Lazard Corporate's long position.The idea behind Federated Institutional High and Lazard Corporate Income 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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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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