Correlation Between NextNav Warrant and Definitive Healthcare

Can any of the company-specific risk be diversified away by investing in both NextNav Warrant and Definitive Healthcare 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 Definitive Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NextNav Warrant and Definitive Healthcare Corp, you can compare the effects of market volatilities on NextNav Warrant and Definitive Healthcare 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 Definitive Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextNav Warrant and Definitive Healthcare.

Diversification Opportunities for NextNav Warrant and Definitive Healthcare

0.72

Correlation Coefficient

NextNav Warrant  Definitive Healthcare

Poor diversification

The 3 months correlation between NextNav and Definitive is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and Definitive Healthcare Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Definitive Healthcare 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 Definitive Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Definitive Healthcare has no effect on the direction of NextNav Warrant i.e., NextNav Warrant and Definitive Healthcare go up and down completely randomly.

Pair Corralation between NextNav Warrant and Definitive Healthcare

Assuming the 90 days horizon NextNav Warrant is expected to generate 1.84 times less return on investment than Definitive Healthcare. But when comparing it to its historical volatility, NextNav Warrant is 1.29 times less risky than Definitive Healthcare. It trades about 0.08 of its potential returns per unit of risk. Definitive Healthcare Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  277.00  in Definitive Healthcare Corp on May 4, 2025 and sell it today you would earn a total of  97.00  from holding Definitive Healthcare Corp or generate 35.02% return on investment over 90 days.

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

NextNav Warrant  vs.  Definitive Healthcare Corp

NextNav Warrant

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NextNav Warrant are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NextNav Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Definitive Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Definitive Healthcare Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Definitive Healthcare demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextNav Warrant and Definitive Healthcare

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

The idea behind NextNav Warrant and Definitive Healthcare 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.