Correlation Between Technology Ultrasector and Lazard Strategic

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Can any of the company-specific risk be diversified away by investing in both Technology Ultrasector and Lazard Strategic 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 Technology Ultrasector and Lazard Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Ultrasector Profund and Lazard Strategic Equity, you can compare the effects of market volatilities on Technology Ultrasector and Lazard Strategic 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 Technology Ultrasector with a short position of Lazard Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Ultrasector and Lazard Strategic.

Diversification Opportunities for Technology Ultrasector and Lazard Strategic

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Technology and Lazard is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Technology Ultrasector Profund and Lazard Strategic Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Strategic Equity and Technology Ultrasector 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 Technology Ultrasector Profund are associated (or correlated) with Lazard Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Strategic Equity has no effect on the direction of Technology Ultrasector i.e., Technology Ultrasector and Lazard Strategic go up and down completely randomly.

Pair Corralation between Technology Ultrasector and Lazard Strategic

Assuming the 90 days horizon Technology Ultrasector Profund is expected to generate 2.59 times more return on investment than Lazard Strategic. However, Technology Ultrasector is 2.59 times more volatile than Lazard Strategic Equity. It trades about 0.1 of its potential returns per unit of risk. Lazard Strategic Equity is currently generating about 0.09 per unit of risk. If you would invest  1,701  in Technology Ultrasector Profund on September 7, 2024 and sell it today you would earn a total of  2,555  from holding Technology Ultrasector Profund or generate 150.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Technology Ultrasector Profund  vs.  Lazard Strategic Equity

 Performance 
       Timeline  
Technology Ultrasector 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Technology Ultrasector Profund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Ultrasector showed solid returns over the last few months and may actually be approaching a breakup point.
Lazard Strategic Equity 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Strategic Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Lazard Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Technology Ultrasector and Lazard Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Technology Ultrasector and Lazard Strategic

The main advantage of trading using opposite Technology Ultrasector and Lazard Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Ultrasector position performs unexpectedly, Lazard Strategic 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 Strategic will offset losses from the drop in Lazard Strategic's long position.
The idea behind Technology Ultrasector Profund and Lazard Strategic 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.
Check out your portfolio center.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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