Correlation Between GM and LanzaTech Global
Can any of the company-specific risk be diversified away by investing in both GM and LanzaTech Global 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 GM and LanzaTech Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and LanzaTech Global, you can compare the effects of market volatilities on GM and LanzaTech Global 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 GM with a short position of LanzaTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and LanzaTech Global.
Diversification Opportunities for GM and LanzaTech Global
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and LanzaTech is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global and GM 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 General Motors are associated (or correlated) with LanzaTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LanzaTech Global has no effect on the direction of GM i.e., GM and LanzaTech Global go up and down completely randomly.
Pair Corralation between GM and LanzaTech Global
Allowing for the 90-day total investment horizon General Motors is expected to generate 0.28 times more return on investment than LanzaTech Global. However, General Motors is 3.63 times less risky than LanzaTech Global. It trades about 0.12 of its potential returns per unit of risk. LanzaTech Global is currently generating about -0.17 per unit of risk. If you would invest 5,197 in General Motors on August 31, 2024 and sell it today you would earn a total of 353.00 from holding General Motors or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
General Motors vs. LanzaTech Global
Performance |
| Timeline |
| General Motors |
| LanzaTech Global |
GM and LanzaTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and LanzaTech Global
The main advantage of trading using opposite GM and LanzaTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, LanzaTech Global 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 LanzaTech Global will offset losses from the drop in LanzaTech Global's long position.The idea behind General Motors and LanzaTech Global 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.| LanzaTech Global vs. Flexible Solutions International | LanzaTech Global vs. Summit Materials | LanzaTech Global vs. Asure Software | LanzaTech Global vs. Griffon |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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