Correlation Between Nextnav Acquisition and Waters
Can any of the company-specific risk be diversified away by investing in both Nextnav Acquisition and Waters 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 Waters 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 Waters, you can compare the effects of market volatilities on Nextnav Acquisition and Waters 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 Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextnav Acquisition and Waters.
Diversification Opportunities for Nextnav Acquisition and Waters
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nextnav and Waters is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Waters go up and down completely randomly.
Pair Corralation between Nextnav Acquisition and Waters
Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to generate 2.33 times more return on investment than Waters. However, Nextnav Acquisition is 2.33 times more volatile than Waters. It trades about 0.12 of its potential returns per unit of risk. Waters is currently generating about 0.05 per unit of risk. If you would invest 300.00 in Nextnav Acquisition Corp on September 12, 2024 and sell it today you would earn a total of 1,414 from holding Nextnav Acquisition Corp or generate 471.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextnav Acquisition Corp vs. Waters
Performance |
| Timeline |
| Nextnav Acquisition Corp |
| Waters |
Nextnav Acquisition and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextnav Acquisition and Waters
The main advantage of trading using opposite Nextnav Acquisition and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextnav Acquisition position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| Nextnav Acquisition vs. NetScout Systems | Nextnav Acquisition vs. Priority Technology Holdings | Nextnav Acquisition vs. OneSpan | Nextnav Acquisition vs. Consensus Cloud Solutions |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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