Correlation Between Lazard International and Lazard Us
Can any of the company-specific risk be diversified away by investing in both Lazard International and Lazard Us 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 International and Lazard Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lazard International Equity and Lazard Corporate Income, you can compare the effects of market volatilities on Lazard International and Lazard Us 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 International with a short position of Lazard Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lazard International and Lazard Us.
Diversification Opportunities for Lazard International and Lazard Us
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lazard and Lazard is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lazard International Equity and Lazard Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Corporate Income and Lazard International 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 International Equity are associated (or correlated) with Lazard Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Corporate Income has no effect on the direction of Lazard International i.e., Lazard International and Lazard Us go up and down completely randomly.
Pair Corralation between Lazard International and Lazard Us
Assuming the 90 days horizon Lazard International Equity is expected to generate 3.38 times more return on investment than Lazard Us. However, Lazard International is 3.38 times more volatile than Lazard Corporate Income. It trades about 0.07 of its potential returns per unit of risk. Lazard Corporate Income is currently generating about 0.16 per unit of risk. If you would invest 1,455 in Lazard International Equity on November 28, 2024 and sell it today you would earn a total of 272.00 from holding Lazard International Equity or generate 18.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lazard International Equity vs. Lazard Corporate Income
Performance |
| Timeline |
| Lazard International |
| Lazard Corporate Income |
Lazard International and Lazard Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lazard International and Lazard Us
The main advantage of trading using opposite Lazard International and Lazard Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lazard International position performs unexpectedly, Lazard Us 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 Us will offset losses from the drop in Lazard Us' long position.The idea behind Lazard International Equity and Lazard Corporate Income 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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