Correlation Between Summit Materials and LanzaTech Global
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and LanzaTech Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and LanzaTech Global, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of LanzaTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and LanzaTech Global.
Diversification Opportunities for Summit Materials and LanzaTech Global
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and LanzaTech is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and LanzaTech Global go up and down completely randomly.
Pair Corralation between Summit Materials and LanzaTech Global
Considering the 90-day investment horizon Summit Materials is expected to generate 18.5 times less return on investment than LanzaTech Global. But when comparing it to its historical volatility, Summit Materials is 24.03 times less risky than LanzaTech Global. It trades about 0.06 of its potential returns per unit of risk. LanzaTech Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 37.00 in LanzaTech Global on September 2, 2024 and sell it today you would lose (27.25) from holding LanzaTech Global or give up 73.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.48% |
| Values | Daily Returns |
Summit Materials vs. LanzaTech Global
Performance |
| Timeline |
| Summit Materials |
| LanzaTech Global |
Summit Materials and LanzaTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and LanzaTech Global
The main advantage of trading using opposite Summit Materials and LanzaTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| LanzaTech Global vs. CRA International | LanzaTech Global vs. ICF International | LanzaTech Global vs. Forrester Research | LanzaTech Global vs. Huron Consulting Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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