Correlation Between NextNav Warrant and Trump Media

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

By analyzing existing cross correlation between NextNav Warrant and Trump Media Technology, you can compare the effects of market volatilities on NextNav Warrant and Trump Media 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 Trump Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextNav Warrant and Trump Media.

Diversification Opportunities for NextNav Warrant and Trump Media

0.61

Correlation Coefficient

NextNav Warrant  Trump Media

Poor diversification

The 3 months correlation between NextNav and Trump is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and Trump Media Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trump Media Technology 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 Trump Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trump Media Technology has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and Trump Media go up and down completely randomly.

Pair Corralation between NextNav Warrant and Trump Media

Assuming the 90 days horizon NextNav Warrant is expected to generate 1.59 times more return on investment than Trump Media. However, NextNav Warrant is 1.59 times more volatile than Trump Media Technology. It trades about -0.02 of its potential returns per unit of risk. Trump Media Technology is currently generating about -0.15 per unit of risk. If you would invest  642.00  in NextNav Warrant on December 28, 2024 and sell it today you would lose (162.00) from holding NextNav Warrant or give up 25.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

NextNav Warrant  vs.  Trump Media Technology

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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Trump Media Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trump Media Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NextNav Warrant and Trump Media

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

The idea behind NextNav Warrant and Trump Media Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.