Correlation Between Lazard and Goldman Sachs

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

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

Diversification Opportunities for Lazard and Goldman Sachs

0.57

Correlation Coefficient

Lazard  Goldman Sachs

Very weak diversification

The 3 months correlation between Lazard and Goldman is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lazard and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and Lazard 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 Lazard are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of Lazard i.e., Lazard and Goldman Sachs go up and down completely randomly.

Pair Corralation between Lazard and Goldman Sachs

Considering the 90-day investment horizon Lazard is expected to generate 3.38 times more return on investment than Goldman Sachs. However, Lazard is 3.38 times more volatile than The Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.12 per unit of risk. If you would invest  4,784  in Lazard on August 31, 2024 and sell it today you would earn a total of  988.00  from holding Lazard or generate 20.65% return on investment over 90 days.

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

Lazard  vs.  The Goldman Sachs

Lazard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Lazard showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Goldman Sachs is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lazard and Goldman Sachs

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

The idea behind Lazard and The Goldman Sachs 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.