Correlation Between Lazard and Lion Financial

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

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

Diversification Opportunities for Lazard and Lion Financial

-0.3

Correlation Coefficient

Lazard  Lion Financial

Very good diversification

The 3 months correlation between Lazard and Lion is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lazard and Lion Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Financial Group and Lazard 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 Lazard are associated (or correlated) with Lion Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Financial Group has no effect on the direction of Lazard i.e., Lazard and Lion Financial go up and down completely randomly.

Pair Corralation between Lazard and Lion Financial

Considering the 90-day investment horizon Lazard is expected to generate 0.32 times more return on investment than Lion Financial. However, Lazard is 3.11 times less risky than Lion Financial. It trades about 0.03 of its potential returns per unit of risk. Lion Financial Group is currently generating about 0.0 per unit of risk. If you would invest  4,807  in Lazard on October 6, 2024 and sell it today you would earn a total of  140.00  from holding Lazard or generate 2.91% return on investment over 90 days.

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

Lazard  vs.  Lion Financial Group

Lazard

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Lazard is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Lion Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Lion Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lazard and Lion Financial

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

The idea behind Lazard and Lion Financial Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.