Correlation Between Capital Income and Lazard Real
Can any of the company-specific risk be diversified away by investing in both Capital Income and Lazard Real 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 Capital Income and Lazard Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and Lazard Real Assets, you can compare the effects of market volatilities on Capital Income and Lazard Real 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 Capital Income with a short position of Lazard Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and Lazard Real.
Diversification Opportunities for Capital Income and Lazard Real
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Lazard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and Lazard Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Real Assets and Capital Income 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 Capital Income Builder are associated (or correlated) with Lazard Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Real Assets has no effect on the direction of Capital Income i.e., Capital Income and Lazard Real go up and down completely randomly.
Pair Corralation between Capital Income and Lazard Real
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.8 times more return on investment than Lazard Real. However, Capital Income Builder is 1.25 times less risky than Lazard Real. It trades about 0.08 of its potential returns per unit of risk. Lazard Real Assets is currently generating about 0.05 per unit of risk. If you would invest 5,974 in Capital Income Builder on September 12, 2024 and sell it today you would earn a total of 1,332 from holding Capital Income Builder or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. Lazard Real Assets
Performance |
| Timeline |
| Capital Income Builder |
| Lazard Real Assets |
Capital Income and Lazard Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and Lazard Real
The main advantage of trading using opposite Capital Income and Lazard Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income position performs unexpectedly, Lazard Real 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 Real will offset losses from the drop in Lazard Real's long position.| Capital Income vs. Old Westbury Large | Capital Income vs. Pace Large Growth | Capital Income vs. T Rowe Price | Capital Income vs. T Rowe Price |
| Lazard Real vs. Capital Income Builder | Lazard Real vs. Capital Income Builder | Lazard Real vs. Capital Income Builder | Lazard Real vs. Capital Income Builder |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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