Correlation Between The Value and Lazard International

Can any of the company-specific risk be diversified away by investing in both The Value 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 The Value and Lazard International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Value Fund and Lazard International Strategic, you can compare the effects of market volatilities on The Value 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 The Value with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Value and Lazard International.

Diversification Opportunities for The Value and Lazard International

0.64

Correlation Coefficient

The Value  Lazard International

Poor diversification

The 3 months correlation between The and Lazard is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Value Fund and Lazard International Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and The Value 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 The Value Fund 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 The Value i.e., The Value and Lazard International go up and down completely randomly.

Pair Corralation between The Value and Lazard International

Assuming the 90 days horizon The Value Fund is expected to generate 0.65 times more return on investment than Lazard International. However, The Value Fund is 1.53 times less risky than Lazard International. It trades about -0.1 of its potential returns per unit of risk. Lazard International Strategic is currently generating about -0.09 per unit of risk. If you would invest  3,544  in The Value Fund on December 4, 2024 and sell it today you would lose (209.00) from holding The Value Fund or give up 5.9% of portfolio value over 90 days.

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

The Value Fund  vs.  Lazard International Strategic

Value Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, The Value 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

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with The Value and Lazard International

The main advantage of trading using opposite The Value and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Value 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 The Value Fund 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.