Correlation Between Alphabet and Lazard Short

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

By analyzing existing cross correlation between Alphabet Inc Class C and Lazard Short Duration, you can compare the effects of market volatilities on Alphabet and Lazard Short 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 Alphabet with a short position of Lazard Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and Lazard Short.

Diversification Opportunities for Alphabet and Lazard Short

-0.48

Correlation Coefficient

Alphabet  Lazard Short

Very good diversification

The 3 months correlation between Alphabet and Lazard is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Lazard Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Short Duration and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with Lazard Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Short Duration has no effect on the direction of Alphabet i.e., Alphabet and Lazard Short go up and down completely randomly.

Pair Corralation between Alphabet and Lazard Short

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 15.07 times more return on investment than Lazard Short. However, Alphabet is 15.07 times more volatile than Lazard Short Duration. It trades about 0.2 of its potential returns per unit of risk. Lazard Short Duration is currently generating about -0.04 per unit of risk. If you would invest  15,819  in Alphabet Inc Class C on September 13, 2024 and sell it today you would earn a total of  3,544  from holding Alphabet Inc Class C or generate 22.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Alphabet Inc Class C  vs.  Lazard Short Duration

Alphabet Class C

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

Lazard Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alphabet and Lazard Short

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

The idea behind Alphabet Inc Class C and Lazard Short Duration 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.