Correlation Between Lazard Corporate and Lazard International

Can any of the company-specific risk be diversified away by investing in both Lazard Corporate 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 Corporate 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 Corporate Income and Lazard International Quality, you can compare the effects of market volatilities on Lazard Corporate 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 Corporate with a short position of Lazard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lazard Corporate and Lazard International.

Diversification Opportunities for Lazard Corporate and Lazard International

0.24

Correlation Coefficient

Lazard Corporate  Lazard International

Modest diversification

The 3 months correlation between Lazard and Lazard is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Lazard Corporate Income and Lazard International Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Lazard Corporate 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 Corporate Income 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 Corporate i.e., Lazard Corporate and Lazard International go up and down completely randomly.

Pair Corralation between Lazard Corporate and Lazard International

Assuming the 90 days horizon Lazard Corporate is expected to generate 1.45 times less return on investment than Lazard International. But when comparing it to its historical volatility, Lazard Corporate Income is 4.91 times less risky than Lazard International. It trades about 0.12 of its potential returns per unit of risk. Lazard International Quality is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,659  in Lazard International Quality on September 5, 2024 and sell it today you would earn a total of  28.00  from holding Lazard International Quality or generate 1.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Lazard Corporate Income  vs.  Lazard International Quality

Lazard Corporate Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Corporate Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lazard Corporate 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

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard International Quality are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lazard International 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 Corporate and Lazard International

The main advantage of trading using opposite Lazard Corporate and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lazard Corporate 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 Corporate Income and Lazard International Quality 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.