Correlation Between Vanguard Developed and Lazard International

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

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

Diversification Opportunities for Vanguard Developed and Lazard International

0.29

Correlation Coefficient

Vanguard Developed  Lazard International

Modest diversification

The 3 months correlation between Vanguard and Lazard is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and Lazard International Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard International and Vanguard Developed 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 Vanguard Developed Markets 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 Vanguard Developed i.e., Vanguard Developed and Lazard International go up and down completely randomly.

Pair Corralation between Vanguard Developed and Lazard International

Assuming the 90 days horizon Vanguard Developed Markets is expected to generate 0.48 times more return on investment than Lazard International. However, Vanguard Developed Markets is 2.06 times less risky than Lazard International. It trades about 0.07 of its potential returns per unit of risk. Lazard International Strategic is currently generating about -0.08 per unit of risk. If you would invest  2,495  in Vanguard Developed Markets on December 2, 2024 and sell it today you would earn a total of  78.00  from holding Vanguard Developed Markets or generate 3.13% return on investment over 90 days.

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

Vanguard Developed Markets  vs.  Lazard International Strategic

Vanguard Developed

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Developed Markets are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Developed 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

Very Weak

Over the last 90 days Lazard International Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Vanguard Developed and Lazard International

The main advantage of trading using opposite Vanguard Developed and Lazard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed 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 Vanguard Developed Markets and Lazard International Strategic 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.