Correlation Between Wells Fargo and Lazard Us

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

By analyzing existing cross correlation between Wells Fargo Diversified and Lazard Corporate Income, you can compare the effects of market volatilities on Wells Fargo and Lazard Us 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 Wells Fargo with a short position of Lazard Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Lazard Us.

Diversification Opportunities for Wells Fargo and Lazard Us

-0.28

Correlation Coefficient

Wells Fargo  Lazard Us

Very good diversification

The 3 months correlation between Wells and Lazard is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Diversified and Lazard Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Corporate Income and Wells Fargo 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 Wells Fargo Diversified are associated (or correlated) with Lazard Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Corporate Income has no effect on the direction of Wells Fargo i.e., Wells Fargo and Lazard Us go up and down completely randomly.

Pair Corralation between Wells Fargo and Lazard Us

Assuming the 90 days horizon Wells Fargo Diversified is expected to under-perform the Lazard Us. In addition to that, Wells Fargo is 6.35 times more volatile than Lazard Corporate Income. It trades about -0.06 of its total potential returns per unit of risk. Lazard Corporate Income is currently generating about 0.19 per unit of volatility. If you would invest  1,767  in Lazard Corporate Income on December 21, 2024 and sell it today you would earn a total of  42.00  from holding Lazard Corporate Income or generate 2.38% return on investment over 90 days.

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

Wells Fargo Diversified  vs.  Lazard Corporate Income

Wells Fargo Diversified

Risk-Adjusted Performance

Very Weak

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

Lazard Corporate Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Corporate Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lazard Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wells Fargo and Lazard Us

The main advantage of trading using opposite Wells Fargo and Lazard Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo position performs unexpectedly, Lazard Us 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 Us will offset losses from the drop in Lazard Us' long position.

The idea behind Wells Fargo Diversified and Lazard Corporate Income 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.