Correlation Between Basic Materials and Lazard Emerging

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

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

Diversification Opportunities for Basic Materials and Lazard Emerging

0.0

Correlation Coefficient

Basic Materials  Lazard Emerging

Pay attention - limited upside

The 3 months correlation between Basic and Lazard is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials Fund and Lazard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Emerging Markets and Basic Materials 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 Basic Materials Fund are associated (or correlated) with Lazard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Emerging Markets has no effect on the direction of Basic Materials i.e., Basic Materials and Lazard Emerging go up and down completely randomly.

Pair Corralation between Basic Materials and Lazard Emerging

If you would invest (100.00) in Basic Materials Fund on October 7, 2024 and sell it today you would earn a total of  100.00  from holding Basic Materials Fund or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Basic Materials Fund  vs.  Lazard Emerging Markets

Basic Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Basic Materials Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Basic Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lazard Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lazard Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Basic Materials and Lazard Emerging

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

The idea behind Basic Materials Fund and Lazard Emerging Markets 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.