Correlation Between VHAI and Nextnav Acquisition

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

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

Diversification Opportunities for VHAI and Nextnav Acquisition

-0.38

Correlation Coefficient

VHAI  Nextnav Acquisition

Very good diversification

The 3 months correlation between VHAI and Nextnav is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding VHAI 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 VHAI 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 VHAI 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 VHAI i.e., VHAI and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between VHAI and Nextnav Acquisition

Given the investment horizon of 90 days VHAI is expected to under-perform the Nextnav Acquisition. In addition to that, VHAI is 2.56 times more volatile than Nextnav Acquisition Corp. It trades about -0.17 of its total potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.1 per unit of volatility. If you would invest  295.00  in Nextnav Acquisition Corp on September 3, 2024 and sell it today you would earn a total of  1,430  from holding Nextnav Acquisition Corp or generate 484.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	39.19%
Values	Daily Returns

VHAI  vs.  Nextnav Acquisition Corp

VHAI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VHAI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Nextnav Acquisition Corp

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nextnav Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VHAI and Nextnav Acquisition

The main advantage of trading using opposite VHAI and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VHAI 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 VHAI 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.