Correlation Between Visa and Lazard
Can any of the company-specific risk be diversified away by investing in both Visa and Lazard 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 Visa and Lazard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Lazard, you can compare the effects of market volatilities on Visa and Lazard 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 Visa with a short position of Lazard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Lazard.
Diversification Opportunities for Visa and Lazard
Poor diversification
The 3 months correlation between Visa and Lazard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Lazard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard and Visa 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 Visa Class A are associated (or correlated) with Lazard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard has no effect on the direction of Visa i.e., Visa and Lazard go up and down completely randomly.
Pair Corralation between Visa and Lazard
Taking into account the 90-day investment horizon Visa is expected to generate 1.65 times less return on investment than Lazard. But when comparing it to its historical volatility, Visa Class A is 2.9 times less risky than Lazard. It trades about 0.37 of its potential returns per unit of risk. Lazard is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 5,123 in Lazard on August 28, 2024 and sell it today you would earn a total of 843.00 from holding Lazard or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Lazard
Performance |
| Timeline |
| Visa Class A |
| Lazard |
Visa and Lazard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Lazard
The main advantage of trading using opposite Visa and Lazard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Lazard 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 will offset losses from the drop in Lazard's long position.| Visa vs. American Express | Visa vs. Morningstar Unconstrained Allocation | Visa vs. Sitka Gold Corp | Visa vs. MSCI ACWI exAUCONSUMER |
| Lazard vs. PJT Partners | Lazard vs. Moelis Co | Lazard vs. Houlihan Lokey | Lazard vs. Piper Sandler Companies |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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