Correlation Between LanzaTech Global and BQE Water

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

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

Diversification Opportunities for LanzaTech Global and BQE Water

0.55

Correlation Coefficient

LanzaTech Global  BQE Water

Very weak diversification

The 3 months correlation between LanzaTech and BQE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding LanzaTech Global and BQE Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BQE Water and LanzaTech Global 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 LanzaTech Global are associated (or correlated) with BQE Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BQE Water has no effect on the direction of LanzaTech Global i.e., LanzaTech Global and BQE Water go up and down completely randomly.

Pair Corralation between LanzaTech Global and BQE Water

Given the investment horizon of 90 days LanzaTech Global is expected to generate 4.36 times more return on investment than BQE Water. However, LanzaTech Global is 4.36 times more volatile than BQE Water. It trades about 0.26 of its potential returns per unit of risk. BQE Water is currently generating about 0.22 per unit of risk. If you would invest  101.00  in LanzaTech Global on October 8, 2024 and sell it today you would earn a total of  67.00  from holding LanzaTech Global or generate 66.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

LanzaTech Global  vs.  BQE Water

LanzaTech Global

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LanzaTech Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, LanzaTech Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BQE Water

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BQE Water are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BQE Water is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LanzaTech Global and BQE Water

The main advantage of trading using opposite LanzaTech Global and BQE Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LanzaTech Global position performs unexpectedly, BQE Water 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 BQE Water will offset losses from the drop in BQE Water's long position.

The idea behind LanzaTech Global and BQE Water 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.