Correlation Between Lazard and Jefferies Financial

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

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

Diversification Opportunities for Lazard and Jefferies Financial

0.86

Correlation Coefficient

Lazard  Jefferies Financial

Very poor diversification

The 3 months correlation between Lazard and Jefferies is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lazard and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial 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 Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Lazard i.e., Lazard and Jefferies Financial go up and down completely randomly.

Pair Corralation between Lazard and Jefferies Financial

Considering the 90-day investment horizon Lazard is expected to generate 1.09 times less return on investment than Jefferies Financial. In addition to that, Lazard is 1.75 times more volatile than Jefferies Financial Group. It trades about 0.22 of its total potential returns per unit of risk. Jefferies Financial Group is currently generating about 0.43 per unit of volatility. If you would invest  5,967  in Jefferies Financial Group on July 16, 2024 and sell it today you would earn a total of  523.00  from holding Jefferies Financial Group or generate 8.76% return on investment over 90 days.

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

Lazard  vs.  Jefferies Financial Group

Lazard

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard are ranked lower than 8 (%) 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.

Jefferies Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jefferies Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Jefferies Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lazard and Jefferies Financial

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

The idea behind Lazard and Jefferies Financial Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.