Correlation Between Adams Natural and Lazard International
Can any of the company-specific risk be diversified away by investing in both Adams Natural 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 Adams Natural and Lazard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Natural Resources and Lazard International Compounders, you can compare the effects of market volatilities on Adams Natural 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 Adams Natural with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Natural and Lazard International.
Diversification Opportunities for Adams Natural and Lazard International
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Adams and Lazard is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Adams Natural Resources and Lazard International Compounde in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Adams Natural 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 Adams Natural Resources 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 Adams Natural i.e., Adams Natural and Lazard International go up and down completely randomly.
Pair Corralation between Adams Natural and Lazard International
Considering the 90-day investment horizon Adams Natural Resources is expected to generate 1.2 times more return on investment than Lazard International. However, Adams Natural is 1.2 times more volatile than Lazard International Compounders. It trades about 0.07 of its potential returns per unit of risk. Lazard International Compounders is currently generating about 0.06 per unit of risk. If you would invest 1,925 in Adams Natural Resources on September 12, 2024 and sell it today you would earn a total of 330.00 from holding Adams Natural Resources or generate 17.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Adams Natural Resources vs. Lazard International Compounde
Performance |
| Timeline |
| Adams Natural Resources |
| Lazard International |
Adams Natural and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Natural and Lazard International
The main advantage of trading using opposite Adams Natural and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Natural 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.| Adams Natural vs. Oxford Lane Capital | Adams Natural vs. Orchid Island Capital | Adams Natural vs. Guggenheim Strategic Opportunities | Adams Natural vs. Stone Harbor Emerging |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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