Correlation Between Joint Stock and NextNav Warrant

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

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

Diversification Opportunities for Joint Stock and NextNav Warrant

0.29

Correlation Coefficient

Joint Stock  NextNav Warrant

Modest diversification

The 3 months correlation between Joint and NextNav is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock and NextNav Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextNav Warrant and Joint Stock 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 Joint Stock 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 Joint Stock i.e., Joint Stock and NextNav Warrant go up and down completely randomly.

Pair Corralation between Joint Stock and NextNav Warrant

Given the investment horizon of 90 days Joint Stock is expected to under-perform the NextNav Warrant. But the stock apears to be less risky and, when comparing its historical volatility, Joint Stock is 2.37 times less risky than NextNav Warrant. The stock trades about -0.11 of its potential returns per unit of risk. The NextNav Warrant is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  609.00  in NextNav Warrant on September 22, 2024 and sell it today you would lose (39.00) from holding NextNav Warrant or give up 6.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Joint Stock  vs.  NextNav Warrant

Joint Stock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Joint Stock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

NextNav Warrant

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NextNav Warrant are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, NextNav Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Joint Stock and NextNav Warrant

The main advantage of trading using opposite Joint Stock and NextNav Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Joint Stock 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 Joint Stock 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.