Correlation Between Nextnav Acquisition and Dana

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

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

Diversification Opportunities for Nextnav Acquisition and Dana

-0.72

Correlation Coefficient

Nextnav Acquisition  Dana

Pay attention - limited upside

The 3 months correlation between Nextnav and Dana is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and Nextnav Acquisition 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 Acquisition Corp are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Dana go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Dana

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 1.15 times more return on investment than Dana. However, Nextnav Acquisition is 1.15 times more volatile than Dana Inc. It trades about 0.17 of its potential returns per unit of risk. Dana Inc is currently generating about -0.02 per unit of risk. If you would invest  824.00  in Nextnav Acquisition Corp on September 3, 2024 and sell it today you would earn a total of  915.00  from holding Nextnav Acquisition Corp or generate 111.04% return on investment over 90 days.

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

Nextnav Acquisition Corp  vs.  Dana Inc

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.

Dana Inc

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nextnav Acquisition and Dana

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

The idea behind Nextnav Acquisition Corp and Dana Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.