Correlation Between Nextnav Acquisition and Timken
Can any of the company-specific risk be diversified away by investing in both Nextnav Acquisition and Timken 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 Acquisition and Timken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextnav Acquisition Corp and Timken Company, you can compare the effects of market volatilities on Nextnav Acquisition and Timken 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 Acquisition with a short position of Timken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextnav Acquisition and Timken.
Diversification Opportunities for Nextnav Acquisition and Timken
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nextnav and Timken is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Timken Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timken Company and Nextnav Acquisition 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 Acquisition Corp are associated (or correlated) with Timken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timken Company has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Timken go up and down completely randomly.
Pair Corralation between Nextnav Acquisition and Timken
Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 1.06 times more return on investment than Timken. However, Nextnav Acquisition is 1.06 times more volatile than Timken Company. It trades about 0.42 of its potential returns per unit of risk. Timken Company is currently generating about -0.12 per unit of risk. If you would invest 1,145 in Nextnav Acquisition Corp on August 29, 2024 and sell it today you would earn a total of 461.00 from holding Nextnav Acquisition Corp or generate 40.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextnav Acquisition Corp vs. Timken Company
Performance |
| Timeline |
| Nextnav Acquisition Corp |
| Timken Company |
Nextnav Acquisition and Timken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextnav Acquisition and Timken
The main advantage of trading using opposite Nextnav Acquisition and Timken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextnav Acquisition position performs unexpectedly, Timken 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 Timken will offset losses from the drop in Timken's long position.| Nextnav Acquisition vs. GigaCloud Technology Class | Nextnav Acquisition vs. Telos Corp | Nextnav Acquisition vs. Cemtrex | Nextnav Acquisition vs. authID Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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