Correlation Between Lazard International and Dow Jones

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Lazard International and Dow Jones 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 International and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lazard International Equity and Dow Jones Industrial, you can compare the effects of market volatilities on Lazard International and Dow Jones 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 International with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lazard International and Dow Jones.

Diversification Opportunities for Lazard International and Dow Jones

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Lazard and Dow is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lazard International Equity and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Lazard International 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 International Equity are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lazard International i.e., Lazard International and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between Lazard International and Dow Jones

Assuming the 90 days horizon Lazard International Equity is expected to under-perform the Dow Jones. In addition to that, Lazard International is 1.04 times more volatile than Dow Jones Industrial. It trades about 0.0 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest  3,879,899  in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of  621,505  from holding Dow Jones Industrial or generate 16.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Lazard International Equity  vs.  Dow Jones Industrial

 Performance 
       Timeline  

Lazard International and Dow Jones Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lazard International and Dow Jones

The main advantage of trading using opposite Lazard International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lazard International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.
The idea behind Lazard International Equity and Dow Jones Industrial 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.
Check out your portfolio center.
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.

Other Complementary Tools

Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Transaction History
View history of all your transactions and understand their impact on performance
Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Sign In To Macroaxis
Sign in to explore Macroaxis' wealth optimization platform and fintech modules
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets