Correlation Between Nextnav Acquisition and Synopsys

Can any of the company-specific risk be diversified away by investing in both Nextnav Acquisition and Synopsys 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 Synopsys 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 Synopsys, you can compare the effects of market volatilities on Nextnav Acquisition and Synopsys 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 Synopsys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextnav Acquisition and Synopsys.

Diversification Opportunities for Nextnav Acquisition and Synopsys

-0.55

Correlation Coefficient

Nextnav Acquisition  Synopsys

Excellent diversification

The 3 months correlation between Nextnav and Synopsys is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nextnav Acquisition Corp and Synopsys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopsys 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 Synopsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopsys has no effect on the direction of Nextnav Acquisition i.e., Nextnav Acquisition and Synopsys go up and down completely randomly.

Pair Corralation between Nextnav Acquisition and Synopsys

Allowing for the 90-day total investment horizon Nextnav Acquisition Corp is expected to under-perform the Synopsys. In addition to that, Nextnav Acquisition is 2.5 times more volatile than Synopsys. It trades about -0.15 of its total potential returns per unit of risk. Synopsys is currently generating about 0.23 per unit of volatility. If you would invest  52,338  in Synopsys on March 3, 2024 and sell it today you would earn a total of  3,742  from holding Synopsys or generate 7.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nextnav Acquisition Corp  vs.  Synopsys

Nextnav Acquisition Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Nextnav Acquisition displayed solid returns over the last few months and may actually be approaching a breakup point.

Synopsys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synopsys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Synopsys is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nextnav Acquisition and Synopsys

The main advantage of trading using opposite Nextnav Acquisition and Synopsys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextnav Acquisition position performs unexpectedly, Synopsys 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 Synopsys will offset losses from the drop in Synopsys' long position.

The idea behind Nextnav Acquisition Corp and Synopsys 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.