Correlation Between Ross Stores and LanzaTech Global

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

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

Diversification Opportunities for Ross Stores and LanzaTech Global

-0.26

Correlation Coefficient

Ross Stores  LanzaTech Global

Very good diversification

The 3 months correlation between Ross and LanzaTech is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and LanzaTech Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LanzaTech Global and Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and LanzaTech Global go up and down completely randomly.

Pair Corralation between Ross Stores and LanzaTech Global

Given the investment horizon of 90 days Ross Stores is expected to generate 144.31 times less return on investment than LanzaTech Global. But when comparing it to its historical volatility, Ross Stores is 55.8 times less risky than LanzaTech Global. It trades about 0.03 of its potential returns per unit of risk. LanzaTech Global is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in LanzaTech Global on September 16, 2024 and sell it today you would lose (16.50) from holding LanzaTech Global or give up 66.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.11%
Values	Daily Returns

Ross Stores  vs.  LanzaTech Global

Ross Stores

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The recent 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. 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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Ross Stores and LanzaTech Global

The main advantage of trading using opposite Ross Stores and LanzaTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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 Ross Stores 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.