Correlation Between Nextnav Acquisition and Tri Continental

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

Diversification Opportunities for Nextnav Acquisition and Tri Continental

-0.75

Correlation Coefficient

Nextnav Acquisition  Tri Continental

Pay attention - limited upside

The 3 months correlation between Nextnav and Tri is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Tri Continental PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental PFD 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 Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental PFD has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Tri Continental go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Tri Continental

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 5.97 times more return on investment than Tri Continental. However, Nextnav Acquisition is 5.97 times more volatile than Tri Continental PFD. It trades about 0.11 of its potential returns per unit of risk. Tri Continental PFD is currently generating about -0.09 per unit of risk. If you would invest  1,018  in Nextnav Acquisition Corp on October 23, 2024 and sell it today you would earn a total of  281.00  from holding Nextnav Acquisition Corp or generate 27.6% 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.  Tri Continental PFD

Nextnav Acquisition Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 8 (%) 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.

Tri Continental PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Continental PFD has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tri Continental is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nextnav Acquisition and Tri Continental

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

The idea behind Nextnav Acquisition Corp and Tri Continental PFD 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.