Correlation Between Lazard and Charles Schwab

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

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

Diversification Opportunities for Lazard and Charles Schwab

-0.65

Correlation Coefficient

Lazard  Charles Schwab

Excellent diversification

The 3 months correlation between Lazard and Charles is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Lazard and The Charles Schwab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Schwab 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 Charles Schwab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Schwab has no effect on the direction of Lazard i.e., Lazard and Charles Schwab go up and down completely randomly.

Pair Corralation between Lazard and Charles Schwab

Considering the 90-day investment horizon Lazard is expected to under-perform the Charles Schwab. In addition to that, Lazard is 2.2 times more volatile than The Charles Schwab. It trades about -0.1 of its total potential returns per unit of risk. The Charles Schwab is currently generating about -0.15 per unit of volatility. If you would invest  2,097  in The Charles Schwab on September 13, 2024 and sell it today you would lose (59.00) from holding The Charles Schwab or give up 2.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Lazard  vs.  The Charles Schwab

Lazard

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 6 (%) 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.

Charles Schwab

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Charles Schwab has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Preferred Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Pair Trading with Lazard and Charles Schwab

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

The idea behind Lazard and The Charles Schwab 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.