Correlation Between Nextnav Acquisition and Katapult Holdings

Can any of the company-specific risk be diversified away by investing in both Nextnav Acquisition and Katapult Holdings 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 Katapult Holdings 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 Katapult Holdings, you can compare the effects of market volatilities on Nextnav Acquisition and Katapult Holdings 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 Katapult Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextnav Acquisition and Katapult Holdings.

Diversification Opportunities for Nextnav Acquisition and Katapult Holdings

-0.78

Correlation Coefficient

Nextnav Acquisition  Katapult Holdings

Pay attention - limited upside

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

Pair Corralation between Nextnav Acquisition and Katapult Holdings

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to under-perform the Katapult Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Nextnav Acquisition Corp is 1.83 times less risky than Katapult Holdings. The stock trades about -0.2 of its potential returns per unit of risk. The Katapult Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  635.00  in Katapult Holdings on December 2, 2024 and sell it today you would earn a total of  493.00  from holding Katapult Holdings or generate 77.64% return on investment over 90 days.

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

Nextnav Acquisition Corp  vs.  Katapult Holdings

Nextnav Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextnav Acquisition Corp 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 very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Katapult Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Katapult Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Katapult Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextnav Acquisition and Katapult Holdings

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

The idea behind Nextnav Acquisition Corp and Katapult Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.