Correlation Between American Beacon and Lazard International

Can any of the company-specific risk be diversified away by investing in both American Beacon 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 Beacon 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 Beacon International and Lazard International Strategic, you can compare the effects of market volatilities on American Beacon 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 Beacon with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Lazard International.

Diversification Opportunities for American Beacon and Lazard International

0.77

Correlation Coefficient

American Beacon  Lazard International

Poor diversification

The 3 months correlation between American and Lazard is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon International and Lazard International Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and American Beacon 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 Beacon International 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 Beacon i.e., American Beacon and Lazard International go up and down completely randomly.

Pair Corralation between American Beacon and Lazard International

Assuming the 90 days horizon American Beacon International is expected to under-perform the Lazard International. In addition to that, American Beacon is 1.05 times more volatile than Lazard International Strategic. It trades about -0.1 of its total potential returns per unit of risk. Lazard International Strategic is currently generating about -0.09 per unit of volatility. If you would invest  1,647  in Lazard International Strategic on August 31, 2024 and sell it today you would lose (79.00) from holding Lazard International Strategic or give up 4.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

American Beacon International  vs.  Lazard International Strategic

American Beacon Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Beacon International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, American Beacon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lazard International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lazard International Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Lazard International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Beacon and Lazard International

The main advantage of trading using opposite American Beacon and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.

The idea behind American Beacon International and Lazard International Strategic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.