Correlation Between NextNav Warrant and KVH Industries

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

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

Diversification Opportunities for NextNav Warrant and KVH Industries

-0.11

Correlation Coefficient

NextNav Warrant  KVH Industries

Good diversification

The 3 months correlation between NextNav and KVH is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and KVH Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KVH Industries 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 KVH Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KVH Industries has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and KVH Industries go up and down completely randomly.

Pair Corralation between NextNav Warrant and KVH Industries

Assuming the 90 days horizon NextNav Warrant is expected to under-perform the KVH Industries. In addition to that, NextNav Warrant is 3.17 times more volatile than KVH Industries. It trades about -0.01 of its total potential returns per unit of risk. KVH Industries is currently generating about -0.01 per unit of volatility. If you would invest  558.00  in KVH Industries on December 28, 2024 and sell it today you would lose (19.00) from holding KVH Industries or give up 3.41% of portfolio value over 90 days.

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

NextNav Warrant  vs.  KVH Industries

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.

KVH Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KVH Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, KVH Industries is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NextNav Warrant and KVH Industries

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

The idea behind NextNav Warrant and KVH Industries 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.