Correlation Between NextNav Warrant and VirnetX Holding

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

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

Diversification Opportunities for NextNav Warrant and VirnetX Holding

-0.92

Correlation Coefficient

NextNav Warrant  VirnetX Holding

Pay attention - limited upside

The 3 months correlation between NextNav and VirnetX is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and VirnetX Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VirnetX Holding Corp 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 VirnetX Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VirnetX Holding Corp has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and VirnetX Holding go up and down completely randomly.

Pair Corralation between NextNav Warrant and VirnetX Holding

Assuming the 90 days horizon NextNav Warrant is expected to generate 1.3 times more return on investment than VirnetX Holding. However, NextNav Warrant is 1.3 times more volatile than VirnetX Holding Corp. It trades about 0.23 of its potential returns per unit of risk. VirnetX Holding Corp is currently generating about -0.38 per unit of risk. If you would invest  579.00  in NextNav Warrant on September 17, 2024 and sell it today you would earn a total of  136.00  from holding NextNav Warrant or generate 23.49% return on investment over 90 days.

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

NextNav Warrant  vs.  VirnetX Holding Corp

NextNav Warrant

Risk-Adjusted Performance

26 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NextNav Warrant are ranked lower than 26 (%) 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.

VirnetX Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VirnetX Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NextNav Warrant and VirnetX Holding

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

The idea behind NextNav Warrant and VirnetX Holding 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.