Correlation Between T Rowe and Lazard International
Can any of the company-specific risk be diversified away by investing in both T Rowe 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 T Rowe and Lazard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Lazard International Equity, you can compare the effects of market volatilities on T Rowe 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 T Rowe with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Lazard International.
Diversification Opportunities for T Rowe and Lazard International
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PATFX and Lazard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Lazard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Lazard International go up and down completely randomly.
Pair Corralation between T Rowe and Lazard International
Assuming the 90 days horizon T Rowe is expected to generate 1.61 times less return on investment than Lazard International. But when comparing it to its historical volatility, T Rowe Price is 3.28 times less risky than Lazard International. It trades about 0.13 of its potential returns per unit of risk. Lazard International Equity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,573 in Lazard International Equity on September 12, 2024 and sell it today you would earn a total of 186.00 from holding Lazard International Equity or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Lazard International Equity
Performance |
| Timeline |
| T Rowe Price |
| Lazard International |
T Rowe and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Lazard International
The main advantage of trading using opposite T Rowe and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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.The idea behind T Rowe Price and Lazard International Equity 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.| Lazard International vs. Gamco Global Telecommunications | Lazard International vs. Oklahoma Municipal Fund | Lazard International vs. T Rowe Price | Lazard International vs. Ishares Municipal Bond |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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