Correlation Between MBIA and Lazard

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

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

Diversification Opportunities for MBIA and Lazard

0.64

Correlation Coefficient

MBIA  Lazard

Poor diversification

The 3 months correlation between MBIA and Lazard is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MBIA Inc and Lazard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard and MBIA 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 MBIA Inc are associated (or correlated) with Lazard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard has no effect on the direction of MBIA i.e., MBIA and Lazard go up and down completely randomly.

Pair Corralation between MBIA and Lazard

Considering the 90-day investment horizon MBIA Inc is expected to under-perform the Lazard. In addition to that, MBIA is 1.55 times more volatile than Lazard. It trades about -0.04 of its total potential returns per unit of risk. Lazard is currently generating about -0.05 per unit of volatility. If you would invest  5,151  in Lazard on December 26, 2024 and sell it today you would lose (468.00) from holding Lazard or give up 9.09% of portfolio value over 90 days.

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

MBIA Inc  vs.  Lazard

MBIA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MBIA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Lazard

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lazard has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MBIA and Lazard

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

The idea behind MBIA Inc and Lazard 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.