Correlation Between NextNav Warrant and American Rebel

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

By analyzing existing cross correlation between NextNav Warrant and American Rebel Holdings, you can compare the effects of market volatilities on NextNav Warrant and American Rebel 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 Warrant with a short position of American Rebel. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextNav Warrant and American Rebel.

Diversification Opportunities for NextNav Warrant and American Rebel

-0.55

Correlation Coefficient

NextNav Warrant  American Rebel

Excellent diversification

The 3 months correlation between NextNav and American is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and American Rebel Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Rebel Holdings and NextNav Warrant 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 Warrant are associated (or correlated) with American Rebel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Rebel Holdings has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and American Rebel go up and down completely randomly.

Pair Corralation between NextNav Warrant and American Rebel

Assuming the 90 days horizon NextNav Warrant is expected to under-perform the American Rebel. But the stock apears to be less risky and, when comparing its historical volatility, NextNav Warrant is 4.91 times less risky than American Rebel. The stock trades about -0.01 of its potential returns per unit of risk. The American Rebel Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1.00  in American Rebel Holdings on December 27, 2024 and sell it today you would earn a total of  0.55  from holding American Rebel Holdings or generate 55.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.69%
Values	Daily Returns

NextNav Warrant  vs.  American Rebel Holdings

NextNav Warrant

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextNav Warrant has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NextNav Warrant is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

American Rebel Holdings

Risk-Adjusted Performance

Good

Over the last 90 days American Rebel Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly uncertain fundamental drivers, American Rebel showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextNav Warrant and American Rebel

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

The idea behind NextNav Warrant and American Rebel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.