Correlation Between Charles Schwab and Lazard

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

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

Diversification Opportunities for Charles Schwab and Lazard

0.57

Correlation Coefficient

Charles Schwab  Lazard

Very weak diversification

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

Pair Corralation between Charles Schwab and Lazard

Assuming the 90 days trading horizon Charles Schwab is expected to generate 142.35 times less return on investment than Lazard. But when comparing it to its historical volatility, The Charles Schwab is 8.44 times less risky than Lazard. It trades about 0.01 of its potential returns per unit of risk. Lazard is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,736  in Lazard on September 13, 2024 and sell it today you would earn a total of  668.00  from holding Lazard or generate 14.1% return on investment over 90 days.

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

The Charles Schwab  vs.  Lazard

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. In spite of rather sound fundamental indicators, Charles Schwab is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lazard

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lazard showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Charles Schwab and Lazard

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

The idea behind The Charles Schwab and Lazard 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.