Correlation Between Mid Cap and Lazard Corporate

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Lazard Corporate Income, you can compare the effects of market volatilities on Mid Cap and Lazard Corporate 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 Mid Cap with a short position of Lazard Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Lazard Corporate.

Diversification Opportunities for Mid Cap and Lazard Corporate

0.68

Correlation Coefficient

Mid Cap  Lazard Corporate

Poor diversification

The 3 months correlation between Mid and Lazard is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Lazard Corporate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Corporate Income and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Lazard Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Corporate Income has no effect on the direction of Mid Cap i.e., Mid Cap and Lazard Corporate go up and down completely randomly.

Pair Corralation between Mid Cap and Lazard Corporate

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 5.01 times more return on investment than Lazard Corporate. However, Mid Cap is 5.01 times more volatile than Lazard Corporate Income. It trades about 0.24 of its potential returns per unit of risk. Lazard Corporate Income is currently generating about 0.34 per unit of risk. If you would invest  13,240  in Mid Cap 15x Strategy on October 22, 2024 and sell it today you would earn a total of  648.00  from holding Mid Cap 15x Strategy or generate 4.89% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Lazard Corporate Income

Mid Cap 15x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lazard Corporate Income

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Corporate Income are ranked lower than 7 (%) 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.

Pair Trading with Mid Cap and Lazard Corporate

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

The idea behind Mid Cap 15x Strategy and Lazard Corporate Income 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.