Correlation Between Nextnav Acquisition and Tenable Holdings

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

Diversification Opportunities for Nextnav Acquisition and Tenable Holdings

0.49

Correlation Coefficient

Nextnav Acquisition  Tenable Holdings

Very weak diversification

The 3 months correlation between Nextnav and Tenable is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Tenable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenable 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 Tenable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenable Holdings has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Tenable Holdings go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Tenable Holdings

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 1.99 times more return on investment than Tenable Holdings. However, Nextnav Acquisition is 1.99 times more volatile than Tenable Holdings. It trades about 0.1 of its potential returns per unit of risk. Tenable Holdings is currently generating about 0.02 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 Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nextnav Acquisition Corp  vs.  Tenable Holdings

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.

Tenable Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tenable Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tenable Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nextnav Acquisition and Tenable Holdings

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

The idea behind Nextnav Acquisition Corp and Tenable 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.