Correlation Between Metropolitan West and Lazard Systematic
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Lazard Systematic 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 Metropolitan West and Lazard Systematic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Lazard Systematic Small, you can compare the effects of market volatilities on Metropolitan West and Lazard Systematic 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 Metropolitan West with a short position of Lazard Systematic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Lazard Systematic.
Diversification Opportunities for Metropolitan West and Lazard Systematic
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and Lazard is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Lazard Systematic Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Systematic Small and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Lazard Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Systematic Small has no effect on the direction of Metropolitan West i.e., Metropolitan West and Lazard Systematic go up and down completely randomly.
Pair Corralation between Metropolitan West and Lazard Systematic
Assuming the 90 days horizon Metropolitan West is expected to generate 2.59 times less return on investment than Lazard Systematic. But when comparing it to its historical volatility, Metropolitan West High is 4.8 times less risky than Lazard Systematic. It trades about 0.16 of its potential returns per unit of risk. Lazard Systematic Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 901.00 in Lazard Systematic Small on September 12, 2024 and sell it today you would earn a total of 304.00 from holding Lazard Systematic Small or generate 33.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.03% |
| Values | Daily Returns |
Metropolitan West High vs. Lazard Systematic Small
Performance |
| Timeline |
| Metropolitan West High |
| Lazard Systematic Small |
Metropolitan West and Lazard Systematic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Lazard Systematic
The main advantage of trading using opposite Metropolitan West and Lazard Systematic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Lazard Systematic 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 Systematic will offset losses from the drop in Lazard Systematic's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Lazard Systematic vs. Lgm Risk Managed | Lazard Systematic vs. Calvert High Yield | Lazard Systematic vs. Metropolitan West High | Lazard Systematic vs. Western Asset High |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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