Correlation Between SentinelOne and Nextnav Acquisition

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

Diversification Opportunities for SentinelOne and Nextnav Acquisition

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between SentinelOne and Nextnav is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SentinelOne 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 SentinelOne 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 SentinelOne 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 SentinelOne i.e., SentinelOne and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between SentinelOne and Nextnav Acquisition

Taking into account the 90-day investment horizon SentinelOne is expected to generate 0.91 times more return on investment than Nextnav Acquisition. However, SentinelOne is 1.1 times less risky than Nextnav Acquisition. It trades about 0.08 of its potential returns per unit of risk. Nextnav Acquisition Corp is currently generating about 0.06 per unit of risk. If you would invest  1,615  in SentinelOne on December 1, 2023 and sell it today you would earn a total of  1,207  from holding SentinelOne or generate 74.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SentinelOne  vs.  Nextnav Acquisition Corp

 Performance 
       Timeline  
SentinelOne 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, SentinelOne unveiled solid returns over the last few months and may actually be approaching a breakup point.
Nextnav Acquisition Corp 

Risk-Adjusted Performance

0 of 100

 
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.

SentinelOne and Nextnav Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SentinelOne and Nextnav Acquisition

The main advantage of trading using opposite SentinelOne and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SentinelOne 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 SentinelOne 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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