Correlation Between Real Return and Lazard International

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

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

Diversification Opportunities for Real Return and Lazard International

0.92

Correlation Coefficient

Real Return  Lazard International

Almost no diversification

The 3 months correlation between REAL and Lazard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Real Return Fund and Lazard International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Real Return 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 Real Return Fund 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 Real Return i.e., Real Return and Lazard International go up and down completely randomly.

Pair Corralation between Real Return and Lazard International

Assuming the 90 days horizon Real Return is expected to generate 3.36 times less return on investment than Lazard International. But when comparing it to its historical volatility, Real Return Fund is 2.84 times less risky than Lazard International. It trades about 0.18 of its potential returns per unit of risk. Lazard International Equity is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,576  in Lazard International Equity on December 28, 2024 and sell it today you would earn a total of  169.00  from holding Lazard International Equity or generate 10.72% return on investment over 90 days.

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

Real Return Fund  vs.  Lazard International Equity

Real Return Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Real Return Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Real Return 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard International Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Lazard International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Real Return and Lazard International

The main advantage of trading using opposite Real Return and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Real Return 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 Real Return Fund and Lazard International Equity 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.