Correlation Between Nextnav Acquisition and Oracle

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

Diversification Opportunities for Nextnav Acquisition and Oracle

0.76

Correlation Coefficient

Nextnav Acquisition  Oracle

Poor diversification

The 3 months correlation between Nextnav and Oracle is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Oracle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oracle 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 Oracle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oracle has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Oracle go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Oracle

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 1.98 times more return on investment than Oracle. However, Nextnav Acquisition is 1.98 times more volatile than Oracle. It trades about 0.39 of its potential returns per unit of risk. Oracle is currently generating about 0.03 per unit of risk. If you would invest  760.00  in Nextnav Acquisition Corp on September 17, 2024 and sell it today you would earn a total of  1,040  from holding Nextnav Acquisition Corp or generate 136.84% return on investment over 90 days.

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

Nextnav Acquisition Corp  vs.  Oracle

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.

Oracle

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oracle are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Oracle is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Nextnav Acquisition and Oracle

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

The idea behind Nextnav Acquisition Corp and Oracle 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 Global Correlations module to find global opportunities by holding instruments from different markets.