Correlation Between T Rowe and Lazard Emerging
Can any of the company-specific risk be diversified away by investing in both T Rowe and Lazard Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on T Rowe and Lazard Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Lazard Emerging.
Diversification Opportunities for T Rowe and Lazard Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RRTLX and Lazard is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Lazard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Emerging Markets has no effect on the direction of T Rowe i.e., T Rowe and Lazard Emerging go up and down completely randomly.
Pair Corralation between T Rowe and Lazard Emerging
Assuming the 90 days horizon T Rowe Price is expected to generate 0.38 times more return on investment than Lazard Emerging. However, T Rowe Price is 2.65 times less risky than Lazard Emerging. It trades about 0.07 of its potential returns per unit of risk. Lazard Emerging Markets is currently generating about -0.2 per unit of risk. If you would invest 1,251 in T Rowe Price on August 26, 2024 and sell it today you would earn a total of 6.00 from holding T Rowe Price or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Lazard Emerging Markets
Performance |
| Timeline |
| T Rowe Price |
| Lazard Emerging Markets |
T Rowe and Lazard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Lazard Emerging
The main advantage of trading using opposite T Rowe and Lazard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Lazard Emerging 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 Emerging will offset losses from the drop in Lazard Emerging's long position.| T Rowe vs. Ab Municipal Bond | T Rowe vs. Schwab Treasury Inflation | T Rowe vs. Aqr Managed Futures | T Rowe vs. Loomis Sayles Inflation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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