Correlation Between Global Blue and Nextnav Acquisition

Can any of the company-specific risk be diversified away by investing in both Global Blue 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 Global Blue and Nextnav Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Blue Group and Nextnav Acquisition Corp, you can compare the effects of market volatilities on Global Blue 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 Global Blue with a short position of Nextnav Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Blue and Nextnav Acquisition.

Diversification Opportunities for Global Blue and Nextnav Acquisition

0.7

Correlation Coefficient

Global Blue  Nextnav Acquisition

Poor diversification

The 3 months correlation between Global and Nextnav is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Blue Group 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 Global Blue 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 Global Blue Group 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 Global Blue i.e., Global Blue and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between Global Blue and Nextnav Acquisition

Allowing for the 90-day total investment horizon Global Blue Group is expected to generate 0.7 times more return on investment than Nextnav Acquisition. However, Global Blue Group is 1.43 times less risky than Nextnav Acquisition. It trades about 0.07 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.01 per unit of risk. If you would invest  486.00  in Global Blue Group on June 2, 2024 and sell it today you would earn a total of  57.00  from holding Global Blue Group or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Global Blue Group  vs.  Nextnav Acquisition Corp

Global Blue Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Blue Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental drivers, Global Blue sustained solid returns over the last few months and may actually be approaching a breakup point.

Nextnav Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very 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 newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global Blue and Nextnav Acquisition

The main advantage of trading using opposite Global Blue and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Blue 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 Global Blue Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.