Correlation Between Large Cap and Lazard International
Can any of the company-specific risk be diversified away by investing in both Large 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 Large 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 Large Cap Growth and Lazard International Strategic, you can compare the effects of market volatilities on Large 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 Large Cap with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Lazard International.
Diversification Opportunities for Large Cap and Lazard International
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Large and Lazard is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth and Lazard International Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Large 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 Large Cap Growth 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 Large Cap i.e., Large Cap and Lazard International go up and down completely randomly.
Pair Corralation between Large Cap and Lazard International
Assuming the 90 days horizon Large Cap is expected to generate 1.25 times less return on investment than Lazard International. In addition to that, Large Cap is 1.37 times more volatile than Lazard International Strategic. It trades about 0.16 of its total potential returns per unit of risk. Lazard International Strategic is currently generating about 0.28 per unit of volatility. If you would invest 1,368 in Lazard International Strategic on October 24, 2024 and sell it today you would earn a total of 51.00 from holding Lazard International Strategic or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth vs. Lazard International Strategic
Performance |
| Timeline |
| Large Cap Growth |
| Lazard International |
Large Cap and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Lazard International
The main advantage of trading using opposite Large Cap and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large 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.| Large Cap vs. Large Cap E | Large Cap vs. International Fund International | Large Cap vs. Parnassus Endeavor Fund | Large Cap vs. Parnassus E Equity |
| Lazard International vs. International Fund International | Lazard International vs. Small Cap Equity | Lazard International vs. Laudus Large Cap | Lazard International vs. Large Cap Growth |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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