Correlation Between Joint Stock and NextNav Warrant

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

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

Diversification Opportunities for Joint Stock and NextNav Warrant

-0.32

Correlation Coefficient

Joint Stock  NextNav Warrant

Very good diversification

The 3 months correlation between Joint and NextNav is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock and NextNav Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextNav Warrant and Joint Stock 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 Joint Stock are associated (or correlated) with NextNav Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextNav Warrant has no effect on the direction of Joint Stock i.e., Joint Stock and NextNav Warrant go up and down completely randomly.

Pair Corralation between Joint Stock and NextNav Warrant

Given the investment horizon of 90 days Joint Stock is expected to generate 0.27 times more return on investment than NextNav Warrant. However, Joint Stock is 3.7 times less risky than NextNav Warrant. It trades about 0.0 of its potential returns per unit of risk. NextNav Warrant is currently generating about -0.02 per unit of risk. If you would invest  9,600  in Joint Stock on December 29, 2024 and sell it today you would lose (196.00) from holding Joint Stock or give up 2.04% of portfolio value over 90 days.

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

Joint Stock  vs.  NextNav Warrant

Joint Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

NextNav Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextNav Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Joint Stock and NextNav Warrant

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

The idea behind Joint Stock and NextNav Warrant 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.