Correlation Between Lazard Emerging and Commonwealth Japan
Can any of the company-specific risk be diversified away by investing in both Lazard Emerging and Commonwealth Japan 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 Lazard Emerging and Commonwealth Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lazard Emerging Markets and Commonwealth Japan Fund, you can compare the effects of market volatilities on Lazard Emerging and Commonwealth Japan 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 Lazard Emerging with a short position of Commonwealth Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lazard Emerging and Commonwealth Japan.
Diversification Opportunities for Lazard Emerging and Commonwealth Japan
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lazard and Commonwealth is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lazard Emerging Markets and Commonwealth Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Japan and Lazard Emerging 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 Lazard Emerging Markets are associated (or correlated) with Commonwealth Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Japan has no effect on the direction of Lazard Emerging i.e., Lazard Emerging and Commonwealth Japan go up and down completely randomly.
Pair Corralation between Lazard Emerging and Commonwealth Japan
Assuming the 90 days horizon Lazard Emerging Markets is expected to generate about the same return on investment as Commonwealth Japan Fund. But, Lazard Emerging Markets is 1.09 times less risky than Commonwealth Japan. It trades about -0.15 of its potential returns per unit of risk. Commonwealth Japan Fund is currently generating about -0.14 per unit of risk. If you would invest 403.00 in Commonwealth Japan Fund on August 29, 2024 and sell it today you would lose (24.00) from holding Commonwealth Japan Fund or give up 5.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lazard Emerging Markets vs. Commonwealth Japan Fund
Performance |
| Timeline |
| Lazard Emerging Markets |
| Commonwealth Japan |
Lazard Emerging and Commonwealth Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lazard Emerging and Commonwealth Japan
The main advantage of trading using opposite Lazard Emerging and Commonwealth Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lazard Emerging position performs unexpectedly, Commonwealth Japan 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 Commonwealth Japan will offset losses from the drop in Commonwealth Japan's long position.| Lazard Emerging vs. Vanguard Emerging Markets | Lazard Emerging vs. Vanguard Emerging Markets | Lazard Emerging vs. HUMANA INC | Lazard Emerging vs. Aquagold International |
| Commonwealth Japan vs. Hennessy Japan Fund | Commonwealth Japan vs. Hennessy Japan Fund | Commonwealth Japan vs. Wasatch Emerging India | Commonwealth Japan vs. Global Opportunity Portfolio |
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 Stocks Directory module to find actively traded stocks across global markets.
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