Correlation Between Performant Financial and LanzaTech Global

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

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

Diversification Opportunities for Performant Financial and LanzaTech Global

0.63

Correlation Coefficient

Performant Financial  LanzaTech Global

Poor diversification

The 3 months correlation between Performant and LanzaTech is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global and Performant Financial 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 Performant Financial 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 Performant Financial i.e., Performant Financial and LanzaTech Global go up and down completely randomly.

Pair Corralation between Performant Financial and LanzaTech Global

Given the investment horizon of 90 days Performant Financial is expected to generate 0.48 times more return on investment than LanzaTech Global. However, Performant Financial is 2.08 times less risky than LanzaTech Global. It trades about -0.02 of its potential returns per unit of risk. LanzaTech Global is currently generating about -0.01 per unit of risk. If you would invest  340.00  in Performant Financial on September 3, 2024 and sell it today you would lose (22.00) from holding Performant Financial or give up 6.47% of portfolio value over 90 days.

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

Performant Financial  vs.  LanzaTech Global

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Performant Financial is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

LanzaTech Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LanzaTech Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LanzaTech Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Performant Financial and LanzaTech Global

The main advantage of trading using opposite Performant Financial and LanzaTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performant Financial 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 Performant Financial 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.