Correlation Between Elutia and NextNav Warrant
Can any of the company-specific risk be diversified away by investing in both Elutia and NextNav Warrant 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 Elutia and NextNav Warrant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elutia Inc and NextNav Warrant, you can compare the effects of market volatilities on Elutia and NextNav Warrant 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 Elutia with a short position of NextNav Warrant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elutia and NextNav Warrant.
Diversification Opportunities for Elutia and NextNav Warrant
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Elutia and NextNav is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Elutia Inc and NextNav Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextNav Warrant and Elutia 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 Elutia Inc are associated (or correlated) with NextNav Warrant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextNav Warrant has no effect on the direction of Elutia i.e., Elutia and NextNav Warrant go up and down completely randomly.
Pair Corralation between Elutia and NextNav Warrant
Given the investment horizon of 90 days Elutia is expected to generate 1.16 times less return on investment than NextNav Warrant. But when comparing it to its historical volatility, Elutia Inc is 1.05 times less risky than NextNav Warrant. It trades about 0.23 of its potential returns per unit of risk. NextNav Warrant is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 489.00 in NextNav Warrant on September 4, 2024 and sell it today you would earn a total of 144.00 from holding NextNav Warrant or generate 29.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elutia Inc vs. NextNav Warrant
Performance |
| Timeline |
| Elutia Inc |
| NextNav Warrant |
Elutia and NextNav Warrant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elutia and NextNav Warrant
The main advantage of trading using opposite Elutia and NextNav Warrant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elutia position performs unexpectedly, NextNav Warrant 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 Warrant will offset losses from the drop in NextNav Warrant's long position.The idea behind Elutia Inc and NextNav Warrant 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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