Correlation Between Salient Select and Lazard Us

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

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

Diversification Opportunities for Salient Select and Lazard Us

0.44

Correlation Coefficient

Salient Select  Lazard Us

Very weak diversification

The 3 months correlation between Salient and Lazard is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Salient Select Income and Lazard Equity Centrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Equity Centrated and Salient Select 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 Salient Select Income 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 Equity Centrated has no effect on the direction of Salient Select i.e., Salient Select and Lazard Us go up and down completely randomly.

Pair Corralation between Salient Select and Lazard Us

Assuming the 90 days horizon Salient Select Income is expected to generate 0.35 times more return on investment than Lazard Us. However, Salient Select Income is 2.82 times less risky than Lazard Us. It trades about -0.09 of its potential returns per unit of risk. Lazard Equity Centrated is currently generating about -0.11 per unit of risk. If you would invest  1,839  in Salient Select Income on December 30, 2024 and sell it today you would lose (56.00) from holding Salient Select Income or give up 3.05% of portfolio value over 90 days.

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

Salient Select Income  vs.  Lazard Equity Centrated

Salient Select Income

Risk-Adjusted Performance

Very Weak

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

Lazard Equity Centrated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lazard Equity Centrated has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Salient Select and Lazard Us

The main advantage of trading using opposite Salient Select and Lazard Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Select 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 Salient Select Income and Lazard Equity Centrated 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.