Correlation Between GM and Lazard Global
Can any of the company-specific risk be diversified away by investing in both GM and Lazard Global 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 Global 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 Global Total, you can compare the effects of market volatilities on GM and Lazard Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lazard Global.
Diversification Opportunities for GM and Lazard Global
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Lazard is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lazard Global Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Global Total 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Global Total has no effect on the direction of GM i.e., GM and Lazard Global go up and down completely randomly.
Pair Corralation between GM and Lazard Global
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.14 times more return on investment than Lazard Global. However, GM is 2.14 times more volatile than Lazard Global Total. It trades about 0.05 of its potential returns per unit of risk. Lazard Global Total is currently generating about 0.06 per unit of risk. If you would invest 3,757 in General Motors on August 30, 2024 and sell it today you would earn a total of 1,793 from holding General Motors or generate 47.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
General Motors vs. Lazard Global Total
Performance |
| Timeline |
| General Motors |
| Lazard Global Total |
GM and Lazard Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lazard Global
The main advantage of trading using opposite GM and Lazard Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lazard Global 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 Global will offset losses from the drop in Lazard Global's long position.The idea behind General Motors and Lazard Global Total 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 Global vs. Cohen Steers Closed | Lazard Global vs. Abrdn Emerging Markets | Lazard Global vs. Allianzgi Equity Convertible | Lazard Global vs. Eaton Vance Senior |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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