Correlation Between Lazard International and Lazard Short

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

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

Diversification Opportunities for Lazard International and Lazard Short

0.66

Correlation Coefficient

Lazard International  Lazard Short

Poor diversification

The 3 months correlation between Lazard and Lazard is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lazard International Equity 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 Lazard International 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 International Equity 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 Lazard International i.e., Lazard International and Lazard Short go up and down completely randomly.

Pair Corralation between Lazard International and Lazard Short

Assuming the 90 days horizon Lazard International Equity is expected to generate 5.33 times more return on investment than Lazard Short. However, Lazard International is 5.33 times more volatile than Lazard Short Duration. It trades about 0.05 of its potential returns per unit of risk. Lazard Short Duration is currently generating about 0.14 per unit of risk. If you would invest  1,034  in Lazard International Equity on September 12, 2024 and sell it today you would earn a total of  84.00  from holding Lazard International Equity or generate 8.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Lazard International Equity  vs.  Lazard Short Duration

Lazard International

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Lazard International and Lazard Short

The main advantage of trading using opposite Lazard International and Lazard Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lazard International 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 Lazard International Equity 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.