Correlation Between Lazard Global and Principal Real

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

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

Diversification Opportunities for Lazard Global and Principal Real

0.19

Correlation Coefficient

Lazard Global  Principal Real

Average diversification

The 3 months correlation between Lazard and Principal is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lazard Global Total and Principal Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Real Estate and Lazard Global 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 Global Total are associated (or correlated) with Principal Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Real Estate has no effect on the direction of Lazard Global i.e., Lazard Global and Principal Real go up and down completely randomly.

Pair Corralation between Lazard Global and Principal Real

Considering the 90-day investment horizon Lazard Global Total is expected to under-perform the Principal Real. In addition to that, Lazard Global is 1.21 times more volatile than Principal Real Estate. It trades about -0.02 of its total potential returns per unit of risk. Principal Real Estate is currently generating about 0.26 per unit of volatility. If you would invest  945.00  in Principal Real Estate on December 29, 2024 and sell it today you would earn a total of  102.00  from holding Principal Real Estate or generate 10.79% return on investment over 90 days.

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

Lazard Global Total  vs.  Principal Real Estate

Lazard Global Total

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lazard Global Total has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong technical and fundamental indicators, Lazard Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Principal Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Real Estate are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Principal Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lazard Global and Principal Real

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

The idea behind Lazard Global Total and Principal Real Estate 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.