Correlation Between Small Cap and Lazard International
Can any of the company-specific risk be diversified away by investing in both Small Cap and Lazard International 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 Small Cap and Lazard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Lazard International Equity, you can compare the effects of market volatilities on Small Cap and Lazard International 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 Small Cap with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Lazard International.
Diversification Opportunities for Small Cap and Lazard International
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Small and Lazard is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Lazard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Small Cap 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 Small Cap Equity are associated (or correlated) with Lazard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard International has no effect on the direction of Small Cap i.e., Small Cap and Lazard International go up and down completely randomly.
Pair Corralation between Small Cap and Lazard International
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.59 times more return on investment than Lazard International. However, Small Cap is 1.59 times more volatile than Lazard International Equity. It trades about 0.08 of its potential returns per unit of risk. Lazard International Equity is currently generating about -0.02 per unit of risk. If you would invest 3,250 in Small Cap Equity on September 3, 2024 and sell it today you would earn a total of 427.00 from holding Small Cap Equity or generate 13.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Lazard International Equity
Performance |
| Timeline |
| Small Cap Equity |
| Lazard International |
Small Cap and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Lazard International
The main advantage of trading using opposite Small Cap and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Lazard International 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 International will offset losses from the drop in Lazard International's long position.| Small Cap vs. Large Cap Growth | Small Cap vs. Lazard International Strategic | Small Cap vs. Equity Income Fund | Small Cap vs. Large Cap E |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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