Correlation Between Nextnav Acquisition and Ironnet

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

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

Diversification Opportunities for Nextnav Acquisition and Ironnet

-0.78

Correlation Coefficient

Nextnav Acquisition  Ironnet

Pay attention - limited upside

The 3 months correlation between Nextnav and Ironnet is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Ironnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironnet and Nextnav Acquisition 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 Nextnav Acquisition Corp are associated (or correlated) with Ironnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironnet has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Ironnet go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Ironnet

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 0.45 times more return on investment than Ironnet. However, Nextnav Acquisition Corp is 2.24 times less risky than Ironnet. It trades about 0.1 of its potential returns per unit of risk. Ironnet is currently generating about 0.01 per unit of risk. If you would invest  293.00  in Nextnav Acquisition Corp on September 20, 2024 and sell it today you would earn a total of  1,462  from holding Nextnav Acquisition Corp or generate 498.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.48%
Values	Daily Returns

Nextnav Acquisition Corp  vs.  Ironnet

Nextnav Acquisition Corp

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nextnav Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Ironnet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ironnet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ironnet is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nextnav Acquisition and Ironnet

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

The idea behind Nextnav Acquisition Corp and Ironnet 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.