Correlation Between New World and Lazard Emerging
Can any of the company-specific risk be diversified away by investing in both New World and Lazard Emerging 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 New World and Lazard Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New World Fund and Lazard Emerging Markets, you can compare the effects of market volatilities on New World and Lazard Emerging 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 New World with a short position of Lazard Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of New World and Lazard Emerging.
Diversification Opportunities for New World and Lazard Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Lazard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding New World Fund and Lazard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Emerging Markets and New World 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 New World Fund are associated (or correlated) with Lazard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Emerging Markets has no effect on the direction of New World i.e., New World and Lazard Emerging go up and down completely randomly.
Pair Corralation between New World and Lazard Emerging
Assuming the 90 days horizon New World Fund is expected to under-perform the Lazard Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, New World Fund is 1.13 times less risky than Lazard Emerging. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Lazard Emerging Markets is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,819 in Lazard Emerging Markets on January 26, 2024 and sell it today you would lose (10.00) from holding Lazard Emerging Markets or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New World Fund vs. Lazard Emerging Markets
Performance |
| Timeline |
| New World Fund |
| Lazard Emerging Markets |
New World and Lazard Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New World and Lazard Emerging
The main advantage of trading using opposite New World and Lazard Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New World position performs unexpectedly, Lazard Emerging 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 Emerging will offset losses from the drop in Lazard Emerging's long position.| New World vs. Amana Income Fund | New World vs. Amana Growth Fund | New World vs. Amana Participation Fund | New World vs. HUMANA INC |
| Lazard Emerging vs. Heritage Fund Investor | Lazard Emerging vs. Real Estate Fund | Lazard Emerging vs. Global Growth Fund | Lazard Emerging vs. Utilities Fund Investor |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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