Correlation Between NextNav Warrant and Flex
Can any of the company-specific risk be diversified away by investing in both NextNav Warrant and Flex 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 Flex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextNav Warrant and Flex, you can compare the effects of market volatilities on NextNav Warrant and Flex 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 Flex. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextNav Warrant and Flex.
Diversification Opportunities for NextNav Warrant and Flex
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NextNav and Flex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex 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 Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and Flex go up and down completely randomly.
Pair Corralation between NextNav Warrant and Flex
Assuming the 90 days horizon NextNav Warrant is expected to generate 1.76 times more return on investment than Flex. However, NextNav Warrant is 1.76 times more volatile than Flex. It trades about 0.43 of its potential returns per unit of risk. Flex is currently generating about 0.22 per unit of risk. If you would invest 447.00 in NextNav Warrant on September 1, 2024 and sell it today you would earn a total of 230.00 from holding NextNav Warrant or generate 51.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextNav Warrant vs. Flex
Performance |
| Timeline |
| NextNav Warrant |
| Flex |
NextNav Warrant and Flex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextNav Warrant and Flex
The main advantage of trading using opposite NextNav Warrant and Flex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextNav Warrant position performs unexpectedly, Flex 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 Flex will offset losses from the drop in Flex's long position.The idea behind NextNav Warrant and Flex 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |