Correlation Between Lazard and Xp

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

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

Diversification Opportunities for Lazard and Xp

-0.12

Correlation Coefficient

Lazard  Xp

Good diversification

The 3 months correlation between Lazard and Xp is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lazard and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Lazard i.e., Lazard and Xp go up and down completely randomly.

Pair Corralation between Lazard and Xp

Considering the 90-day investment horizon Lazard is expected to generate 0.76 times more return on investment than Xp. However, Lazard is 1.31 times less risky than Xp. It trades about -0.32 of its potential returns per unit of risk. Xp Inc is currently generating about -0.27 per unit of risk. If you would invest  5,668  in Lazard on October 5, 2024 and sell it today you would lose (594.00) from holding Lazard or give up 10.48% of portfolio value over 90 days.

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

Lazard  vs.  Xp Inc

Lazard

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Lazard may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lazard and Xp

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

The idea behind Lazard and Xp Inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.