Correlation Between Virtus Convertible and Lazard Systematic

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

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

Diversification Opportunities for Virtus Convertible and Lazard Systematic

0.94

Correlation Coefficient

Virtus Convertible  Lazard Systematic

Almost no diversification

The 3 months correlation between Virtus and Lazard is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Convertible and Lazard Systematic Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Systematic Small and Virtus Convertible 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 Virtus Convertible are associated (or correlated) with Lazard Systematic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Systematic Small has no effect on the direction of Virtus Convertible i.e., Virtus Convertible and Lazard Systematic go up and down completely randomly.

Pair Corralation between Virtus Convertible and Lazard Systematic

Assuming the 90 days horizon Virtus Convertible is expected to generate 1.84 times less return on investment than Lazard Systematic. But when comparing it to its historical volatility, Virtus Convertible is 1.96 times less risky than Lazard Systematic. It trades about 0.09 of its potential returns per unit of risk. Lazard Systematic Small is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  901.00  in Lazard Systematic Small on September 13, 2024 and sell it today you would earn a total of  303.00  from holding Lazard Systematic Small or generate 33.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	87.5%
Values	Daily Returns

Virtus Convertible  vs.  Lazard Systematic Small

Virtus Convertible

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Convertible are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Virtus Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lazard Systematic Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Systematic Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, Lazard Systematic may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Virtus Convertible and Lazard Systematic

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

The idea behind Virtus Convertible and Lazard Systematic Small 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.