Correlation Between Lazard Small and Columbia Global

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

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

Diversification Opportunities for Lazard Small and Columbia Global

0.94

Correlation Coefficient

Lazard Small  Columbia Global

Almost no diversification

The 3 months correlation between Lazard and Columbia is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lazard Small Mid Cap and Columbia Global Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Global Tech and Lazard Small 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 Small Mid Cap are associated (or correlated) with Columbia Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Global Tech has no effect on the direction of Lazard Small i.e., Lazard Small and Columbia Global go up and down completely randomly.

Pair Corralation between Lazard Small and Columbia Global

Assuming the 90 days horizon Lazard Small Mid Cap is expected to generate 2.23 times more return on investment than Columbia Global. However, Lazard Small is 2.23 times more volatile than Columbia Global Technology. It trades about 0.09 of its potential returns per unit of risk. Columbia Global Technology is currently generating about 0.19 per unit of risk. If you would invest  1,158  in Lazard Small Mid Cap on September 15, 2024 and sell it today you would earn a total of  69.00  from holding Lazard Small Mid Cap or generate 5.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Lazard Small Mid Cap  vs.  Columbia Global Technology

Lazard Small Mid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Small Mid Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lazard Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Global Tech

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Global Technology are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Columbia Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lazard Small and Columbia Global

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

The idea behind Lazard Small Mid Cap and Columbia Global Technology 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.