Correlation Between American Funds and Lazard International
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Lazard International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Lazard International Equity, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Lazard International.
Diversification Opportunities for American Funds and Lazard International
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Lazard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Lazard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and American Funds 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 American Funds Retirement 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 American Funds i.e., American Funds and Lazard International go up and down completely randomly.
Pair Corralation between American Funds and Lazard International
Assuming the 90 days horizon American Funds Retirement is expected to generate 0.57 times more return on investment than Lazard International. However, American Funds Retirement is 1.76 times less risky than Lazard International. It trades about 0.1 of its potential returns per unit of risk. Lazard International Equity is currently generating about 0.03 per unit of risk. If you would invest 1,092 in American Funds Retirement on August 31, 2024 and sell it today you would earn a total of 188.00 from holding American Funds Retirement or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Lazard International Equity
Performance |
| Timeline |
| American Funds Retirement |
| Lazard International |
American Funds and Lazard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Lazard International
The main advantage of trading using opposite American Funds and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Baird Smallmid Cap | American Funds vs. Touchstone Small Cap | American Funds vs. Kinetics Small Cap | American Funds vs. Small Midcap Dividend Income |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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