Correlation Between LanzaTech Global and CoreCivic

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

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

Diversification Opportunities for LanzaTech Global and CoreCivic

0.68

Correlation Coefficient

LanzaTech Global  CoreCivic

Poor diversification

The 3 months correlation between LanzaTech and CoreCivic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LanzaTech Global and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of LanzaTech Global i.e., LanzaTech Global and CoreCivic go up and down completely randomly.

Pair Corralation between LanzaTech Global and CoreCivic

Given the investment horizon of 90 days LanzaTech Global is expected to generate 4.63 times more return on investment than CoreCivic. However, LanzaTech Global is 4.63 times more volatile than CoreCivic. It trades about -0.02 of its potential returns per unit of risk. CoreCivic is currently generating about -0.14 per unit of risk. If you would invest  124.00  in LanzaTech Global on November 28, 2024 and sell it today you would lose (42.00) from holding LanzaTech Global or give up 33.87% of portfolio value over 90 days.

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

LanzaTech Global  vs.  CoreCivic

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 March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CoreCivic

Risk-Adjusted Performance

Very Weak

Over the last 90 days CoreCivic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with LanzaTech Global and CoreCivic

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

The idea behind LanzaTech Global and CoreCivic 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.