Correlation Between Lazard Emerging and Lazard International
Can any of the company-specific risk be diversified away by investing in both Lazard Emerging 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 Lazard Emerging and Lazard International 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 Lazard International Equity, you can compare the effects of market volatilities on Lazard Emerging 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 Lazard Emerging with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lazard Emerging and Lazard International.
Diversification Opportunities for Lazard Emerging and Lazard International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lazard and Lazard is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lazard Emerging Markets and Lazard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International 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 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 Lazard Emerging i.e., Lazard Emerging and Lazard International go up and down completely randomly.
Pair Corralation between Lazard Emerging and Lazard International
Assuming the 90 days horizon Lazard Emerging Markets is expected to under-perform the Lazard International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lazard Emerging Markets is 1.06 times less risky than Lazard International. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Lazard International Equity is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,116 in Lazard International Equity on September 2, 2024 and sell it today you would lose (13.00) from holding Lazard International Equity or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lazard Emerging Markets vs. Lazard International Equity
Performance |
| Timeline |
| Lazard Emerging Markets |
| Lazard International |
Lazard Emerging and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lazard Emerging and Lazard International
The main advantage of trading using opposite Lazard Emerging and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lazard Emerging 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.| Lazard Emerging vs. Matthews Japan Fund | Lazard Emerging vs. Hennessy Japan Fund | Lazard Emerging vs. Basic Materials Fund | Lazard Emerging vs. Basic Materials Fund |
| Lazard International vs. Lazard International Equity | Lazard International vs. Lazard International Small | Lazard International vs. Lazard Corporate Income | Lazard International vs. Lazard Strategic Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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