Correlation Between Cullen High and Lazard Capital
Can any of the company-specific risk be diversified away by investing in both Cullen High and Lazard Capital 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 Cullen High and Lazard Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cullen High Dividend and Lazard Capital Allocator, you can compare the effects of market volatilities on Cullen High and Lazard Capital 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 Cullen High with a short position of Lazard Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cullen High and Lazard Capital.
Diversification Opportunities for Cullen High and Lazard Capital
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cullen and Lazard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cullen High Dividend and Lazard Capital Allocator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Capital Allocator and Cullen High 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 Cullen High Dividend are associated (or correlated) with Lazard Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Capital Allocator has no effect on the direction of Cullen High i.e., Cullen High and Lazard Capital go up and down completely randomly.
Pair Corralation between Cullen High and Lazard Capital
Assuming the 90 days horizon Cullen High is expected to generate 3.97 times less return on investment than Lazard Capital. But when comparing it to its historical volatility, Cullen High Dividend is 1.12 times less risky than Lazard Capital. It trades about 0.06 of its potential returns per unit of risk. Lazard Capital Allocator is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,056 in Lazard Capital Allocator on September 5, 2024 and sell it today you would earn a total of 88.00 from holding Lazard Capital Allocator or generate 8.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Cullen High Dividend vs. Lazard Capital Allocator
Performance |
Timeline |
Cullen High Dividend |
Lazard Capital Allocator |
Cullen High and Lazard Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cullen High and Lazard Capital
The main advantage of trading using opposite Cullen High and Lazard Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cullen High position performs unexpectedly, Lazard Capital 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 Capital will offset losses from the drop in Lazard Capital's long position.Cullen High vs. Cullen Small Cap | Cullen High vs. Cullen Small Cap | Cullen High vs. Cullen Small Cap | Cullen High vs. Cullen Emerging Markets |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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