Correlation Between 05724BAD1 and NextNav Warrant

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Can any of the company-specific risk be diversified away by investing in both 05724BAD1 and NextNav Warrant 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 05724BAD1 and NextNav Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHI 2061 15 DEC 26 and NextNav Warrant, you can compare the effects of market volatilities on 05724BAD1 and NextNav Warrant 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 05724BAD1 with a short position of NextNav Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05724BAD1 and NextNav Warrant.

Diversification Opportunities for 05724BAD1 and NextNav Warrant

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between 05724BAD1 and NextNav is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BHI 2061 15 DEC 26 and NextNav Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextNav Warrant and 05724BAD1 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 BHI 2061 15 DEC 26 are associated (or correlated) with NextNav Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextNav Warrant has no effect on the direction of 05724BAD1 i.e., 05724BAD1 and NextNav Warrant go up and down completely randomly.

Pair Corralation between 05724BAD1 and NextNav Warrant

Assuming the 90 days trading horizon BHI 2061 15 DEC 26 is expected to under-perform the NextNav Warrant. But the bond apears to be less risky and, when comparing its historical volatility, BHI 2061 15 DEC 26 is 14.67 times less risky than NextNav Warrant. The bond trades about -0.09 of its potential returns per unit of risk. The NextNav Warrant is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  235.00  in NextNav Warrant on October 3, 2024 and sell it today you would earn a total of  339.00  from holding NextNav Warrant or generate 144.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.8%
ValuesDaily Returns

BHI 2061 15 DEC 26  vs.  NextNav Warrant

 Performance 
       Timeline  
BHI 2061 15 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BHI 2061 15 DEC 26 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 05724BAD1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
NextNav Warrant 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in NextNav Warrant are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, NextNav Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

05724BAD1 and NextNav Warrant Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 05724BAD1 and NextNav Warrant

The main advantage of trading using opposite 05724BAD1 and NextNav Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05724BAD1 position performs unexpectedly, NextNav Warrant 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 Warrant will offset losses from the drop in NextNav Warrant's long position.
The idea behind BHI 2061 15 DEC 26 and NextNav Warrant 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.

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