Correlation Between NextNav Warrant and Nextnav Acquisition

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

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

Diversification Opportunities for NextNav Warrant and Nextnav Acquisition

0.89

Correlation Coefficient

NextNav Warrant  Nextnav Acquisition

Very poor diversification

The 3 months correlation between NextNav and Nextnav is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp 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 Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between NextNav Warrant and Nextnav Acquisition

Assuming the 90 days horizon NextNav Warrant is expected to generate 1.49 times more return on investment than Nextnav Acquisition. However, NextNav Warrant is 1.49 times more volatile than Nextnav Acquisition Corp. It trades about -0.02 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about -0.05 per unit of risk. If you would invest  642.00  in NextNav Warrant on December 29, 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	Strong
Accuracy	100.0%
Values	Daily Returns

NextNav Warrant  vs.  Nextnav Acquisition Corp

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 inconsistent 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.

Nextnav Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextnav Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with NextNav Warrant and Nextnav Acquisition

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

The idea behind NextNav Warrant and Nextnav Acquisition Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.