Correlation Between Netcapital and Lazard

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

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

Diversification Opportunities for Netcapital and Lazard

0.37

Correlation Coefficient

Netcapital  Lazard

Weak diversification

The 3 months correlation between Netcapital and Lazard is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Netcapital and Lazard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard and Netcapital 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 Netcapital 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 Netcapital i.e., Netcapital and Lazard go up and down completely randomly.

Pair Corralation between Netcapital and Lazard

Given the investment horizon of 90 days Netcapital is expected to generate 2.24 times more return on investment than Lazard. However, Netcapital is 2.24 times more volatile than Lazard. It trades about 0.13 of its potential returns per unit of risk. Lazard is currently generating about -0.04 per unit of risk. If you would invest  160.00  in Netcapital on October 6, 2024 and sell it today you would earn a total of  51.00  from holding Netcapital or generate 31.87% return on investment over 90 days.

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

Netcapital  vs.  Lazard

Netcapital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Netcapital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Netcapital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Lazard

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Lazard is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Netcapital and Lazard

The main advantage of trading using opposite Netcapital and Lazard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netcapital 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 Netcapital 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.