Correlation Between GM and Lazard Developing
Can any of the company-specific risk be diversified away by investing in both GM and Lazard Developing 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 GM and Lazard Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Lazard Developing Markets, you can compare the effects of market volatilities on GM and Lazard Developing 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 GM with a short position of Lazard Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lazard Developing.
Diversification Opportunities for GM and Lazard Developing
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between GM and Lazard is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lazard Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Developing Markets and GM 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 General Motors are associated (or correlated) with Lazard Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Developing Markets has no effect on the direction of GM i.e., GM and Lazard Developing go up and down completely randomly.
Pair Corralation between GM and Lazard Developing
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Lazard Developing. In addition to that, GM is 3.43 times more volatile than Lazard Developing Markets. It trades about -0.14 of its total potential returns per unit of risk. Lazard Developing Markets is currently generating about -0.08 per unit of volatility. If you would invest 1,405 in Lazard Developing Markets on September 12, 2024 and sell it today you would lose (18.00) from holding Lazard Developing Markets or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Lazard Developing Markets
Performance |
| Timeline |
| General Motors |
| Lazard Developing Markets |
GM and Lazard Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lazard Developing
The main advantage of trading using opposite GM and Lazard Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lazard Developing 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 Developing will offset losses from the drop in Lazard Developing's long position.The idea behind General Motors and Lazard Developing 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 Developing vs. Equity Series Class | Lazard Developing vs. Dreyfus International Bond | Lazard Developing vs. Blackrock Hi Yld | Lazard Developing vs. Heartland Value Plus |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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