Correlation Between NextNav Warrant and Lipocine

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

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

Diversification Opportunities for NextNav Warrant and Lipocine

0.16

Correlation Coefficient

NextNav Warrant  Lipocine

Average diversification

The 3 months correlation between NextNav and Lipocine is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and Lipocine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipocine and NextNav Warrant 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 Warrant are associated (or correlated) with Lipocine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipocine has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and Lipocine go up and down completely randomly.

Pair Corralation between NextNav Warrant and Lipocine

Assuming the 90 days horizon NextNav Warrant is expected to generate 1.03 times more return on investment than Lipocine. However, NextNav Warrant is 1.03 times more volatile than Lipocine. It trades about 0.32 of its potential returns per unit of risk. Lipocine is currently generating about 0.04 per unit of risk. If you would invest  257.00  in NextNav Warrant on September 14, 2024 and sell it today you would earn a total of  376.00  from holding NextNav Warrant or generate 146.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

NextNav Warrant  vs.  Lipocine

NextNav Warrant

Risk-Adjusted Performance

25 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NextNav Warrant are ranked lower than 25 (%) 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.

Lipocine

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with NextNav Warrant and Lipocine

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

The idea behind NextNav Warrant and Lipocine 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.