Correlation Between Lazard Capital and Lazard International

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

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

Diversification Opportunities for Lazard Capital and Lazard International

0.1

Correlation Coefficient

Lazard Capital  Lazard International

Average diversification

The 3 months correlation between Lazard and Lazard is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lazard Capital Allocator and Lazard International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Lazard Capital 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 Capital Allocator are associated (or correlated) with Lazard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard International has no effect on the direction of Lazard Capital i.e., Lazard Capital and Lazard International go up and down completely randomly.

Pair Corralation between Lazard Capital and Lazard International

Assuming the 90 days horizon Lazard Capital Allocator is expected to under-perform the Lazard International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Lazard Capital Allocator is 1.04 times less risky than Lazard International. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Lazard International Small is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  796.00  in Lazard International Small on December 26, 2024 and sell it today you would earn a total of  58.00  from holding Lazard International Small or generate 7.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Lazard Capital Allocator  vs.  Lazard International Small

Lazard Capital Allocator

Risk-Adjusted Performance

Very Weak

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

Lazard International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard International Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Lazard International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lazard Capital and Lazard International

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

The idea behind Lazard Capital Allocator and Lazard International Small 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.