Correlation Between Deluxe and LanzaTech Global

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

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

Diversification Opportunities for Deluxe and LanzaTech Global

0.79

Correlation Coefficient

Deluxe  LanzaTech Global

Poor diversification

The 3 months correlation between Deluxe and LanzaTech is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Deluxe and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global and Deluxe 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 Deluxe 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 Deluxe i.e., Deluxe and LanzaTech Global go up and down completely randomly.

Pair Corralation between Deluxe and LanzaTech Global

Considering the 90-day investment horizon Deluxe is expected to generate 0.25 times more return on investment than LanzaTech Global. However, Deluxe is 3.94 times less risky than LanzaTech Global. It trades about -0.23 of its potential returns per unit of risk. LanzaTech Global is currently generating about -0.31 per unit of risk. If you would invest  2,241  in Deluxe on December 30, 2024 and sell it today you would lose (654.00) from holding Deluxe or give up 29.18% of portfolio value over 90 days.

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

Deluxe  vs.  LanzaTech Global

Deluxe

Risk-Adjusted Performance

Very Weak

Over the last 90 days Deluxe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

LanzaTech Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days LanzaTech Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Deluxe and LanzaTech Global

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