Correlation Between ROK Resources and Nextnav Acquisition

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

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

Diversification Opportunities for ROK Resources and Nextnav Acquisition

-0.02

Correlation Coefficient

ROK Resources  Nextnav Acquisition

Good diversification

The 3 months correlation between ROK and Nextnav is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding ROK Resources 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 ROK Resources 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 ROK Resources 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 ROK Resources i.e., ROK Resources and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between ROK Resources and Nextnav Acquisition

Assuming the 90 days horizon ROK Resources is expected to generate 0.86 times more return on investment than Nextnav Acquisition. However, ROK Resources is 1.16 times less risky than Nextnav Acquisition. It trades about 0.02 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about -0.04 per unit of risk. If you would invest  11.00  in ROK Resources on December 27, 2024 and sell it today you would earn a total of  0.00  from holding ROK Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

ROK Resources  vs.  Nextnav Acquisition Corp

ROK Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ROK Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ROK Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 ROK Resources and Nextnav Acquisition

The main advantage of trading using opposite ROK Resources and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ROK Resources 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 ROK Resources 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.