Correlation Between BlackBerry and Nextnav Acquisition

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Can any of the company-specific risk be diversified away by investing in both BlackBerry 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 BlackBerry and Nextnav Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackBerry and Nextnav Acquisition Corp, you can compare the effects of market volatilities on BlackBerry 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 BlackBerry with a short position of Nextnav Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackBerry and Nextnav Acquisition.

Diversification Opportunities for BlackBerry and Nextnav Acquisition

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between BlackBerry and Nextnav is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BlackBerry 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 BlackBerry 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 BlackBerry 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 BlackBerry i.e., BlackBerry and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between BlackBerry and Nextnav Acquisition

Allowing for the 90-day total investment horizon BlackBerry is expected to under-perform the Nextnav Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, BlackBerry is 1.38 times less risky than Nextnav Acquisition. The stock trades about -0.11 of its potential returns per unit of risk. The Nextnav Acquisition Corp is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  417.00  in Nextnav Acquisition Corp on December 1, 2023 and sell it today you would lose (20.00) from holding Nextnav Acquisition Corp or give up 4.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BlackBerry  vs.  Nextnav Acquisition Corp

 Performance 
       Timeline  
BlackBerry 

Risk-Adjusted Performance

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Over the last 90 days BlackBerry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in March 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Nextnav Acquisition Corp 

Risk-Adjusted Performance

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Low
 
High
Weak
Over the last 90 days Nextnav Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nextnav Acquisition is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BlackBerry and Nextnav Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BlackBerry and Nextnav Acquisition

The main advantage of trading using opposite BlackBerry and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackBerry 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 BlackBerry 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.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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