Correlation Between Lazard and Scully Royalty

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

By analyzing existing cross correlation between Lazard and Scully Royalty, you can compare the effects of market volatilities on Lazard and Scully Royalty 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 Scully Royalty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lazard and Scully Royalty.

Diversification Opportunities for Lazard and Scully Royalty

-0.3

Correlation Coefficient

Lazard  Scully Royalty

Very good diversification

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

Pair Corralation between Lazard and Scully Royalty

Considering the 90-day investment horizon Lazard is expected to generate 1.51 times more return on investment than Scully Royalty. However, Lazard is 1.51 times more volatile than Scully Royalty. It trades about 0.18 of its potential returns per unit of risk. Scully Royalty is currently generating about -0.14 per unit of risk. If you would invest  5,026  in Lazard on August 31, 2024 and sell it today you would earn a total of  746.00  from holding Lazard or generate 14.84% return on investment over 90 days.

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

Lazard  vs.  Scully Royalty

Lazard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Lazard showed solid returns over the last few months and may actually be approaching a breakup point.

Scully Royalty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scully Royalty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Lazard and Scully Royalty

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

The idea behind Lazard and Scully Royalty 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.