Correlation Between Analog Devices and Nextnav Acquisition
Can any of the company-specific risk be diversified away by investing in both Analog Devices and Nextnav Acquisition 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 Analog Devices and Nextnav Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Analog Devices and Nextnav Acquisition Corp, you can compare the effects of market volatilities on Analog Devices and Nextnav Acquisition 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 Analog Devices with a short position of Nextnav Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Analog Devices and Nextnav Acquisition.
Diversification Opportunities for Analog Devices and Nextnav Acquisition
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Analog and Nextnav is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Nextnav Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextnav Acquisition Corp and Analog Devices 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 Analog Devices are associated (or correlated) with Nextnav Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextnav Acquisition Corp has no effect on the direction of Analog Devices i.e., Analog Devices and Nextnav Acquisition go up and down completely randomly.
Pair Corralation between Analog Devices and Nextnav Acquisition
Considering the 90-day investment horizon Analog Devices is expected to generate 7.36 times less return on investment than Nextnav Acquisition. But when comparing it to its historical volatility, Analog Devices is 2.67 times less risky than Nextnav Acquisition. It trades about 0.04 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 302.00 in Nextnav Acquisition Corp on August 27, 2024 and sell it today you would earn a total of 1,285 from holding Nextnav Acquisition Corp or generate 425.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Analog Devices vs. Nextnav Acquisition Corp
Performance |
| Timeline |
| Analog Devices |
| Nextnav Acquisition Corp |
Analog Devices and Nextnav Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Analog Devices and Nextnav Acquisition
The main advantage of trading using opposite Analog Devices and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Analog Devices position performs unexpectedly, Nextnav Acquisition 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 Acquisition will offset losses from the drop in Nextnav Acquisition's long position.The idea behind Analog Devices and Nextnav Acquisition 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.| Nextnav Acquisition vs. NetScout Systems | Nextnav Acquisition vs. Priority Technology Holdings | Nextnav Acquisition vs. OneSpan | Nextnav Acquisition vs. Consensus Cloud Solutions |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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