Correlation Between NextNav Warrant and MagnaChip Semiconductor

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

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

Diversification Opportunities for NextNav Warrant and MagnaChip Semiconductor

-0.78

Correlation Coefficient

NextNav Warrant  MagnaChip Semiconductor

Pay attention - limited upside

The 3 months correlation between NextNav and MagnaChip is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and MagnaChip Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MagnaChip Semiconductor 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 MagnaChip Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MagnaChip Semiconductor has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and MagnaChip Semiconductor go up and down completely randomly.

Pair Corralation between NextNav Warrant and MagnaChip Semiconductor

Assuming the 90 days horizon NextNav Warrant is expected to generate 2.5 times more return on investment than MagnaChip Semiconductor. However, NextNav Warrant is 2.5 times more volatile than MagnaChip Semiconductor. It trades about 0.13 of its potential returns per unit of risk. MagnaChip Semiconductor is currently generating about -0.05 per unit of risk. If you would invest  47.00  in NextNav Warrant on September 14, 2024 and sell it today you would earn a total of  586.00  from holding NextNav Warrant or generate 1246.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.51%
Values	Daily Returns

NextNav Warrant  vs.  MagnaChip Semiconductor

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.

MagnaChip Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MagnaChip Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NextNav Warrant and MagnaChip Semiconductor

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

The idea behind NextNav Warrant and MagnaChip Semiconductor 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.