Correlation Between Stericycle and LanzaTech Global

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

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

Diversification Opportunities for Stericycle and LanzaTech Global

-0.66

Correlation Coefficient

Stericycle  LanzaTech Global

Excellent diversification

The 3 months correlation between Stericycle and LanzaTech is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Stericycle and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global and Stericycle 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 Stericycle 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 Stericycle i.e., Stericycle and LanzaTech Global go up and down completely randomly.

Pair Corralation between Stericycle and LanzaTech Global

Given the investment horizon of 90 days Stericycle is expected to generate 0.61 times more return on investment than LanzaTech Global. However, Stericycle is 1.64 times less risky than LanzaTech Global. It trades about 0.16 of its potential returns per unit of risk. LanzaTech Global is currently generating about -0.03 per unit of risk. If you would invest  5,905  in Stericycle on August 31, 2024 and sell it today you would earn a total of  1,945  from holding Stericycle or generate 32.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	80.95%
Values	Daily Returns

Stericycle  vs.  LanzaTech Global

Stericycle

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Stericycle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite inconsistent fundamental indicators, Stericycle disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Stericycle and LanzaTech Global

The main advantage of trading using opposite Stericycle and LanzaTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stericycle 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 Stericycle 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.