Correlation Between Varonis Systems and Nextnav Acquisition

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

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

Diversification Opportunities for Varonis Systems and Nextnav Acquisition

-0.55

Correlation Coefficient

Varonis Systems  Nextnav Acquisition

Excellent diversification

The 3 months correlation between Varonis and Nextnav is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Varonis Systems 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 Varonis Systems 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 Varonis Systems 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 Varonis Systems i.e., Varonis Systems and Nextnav Acquisition go up and down completely randomly.

Pair Corralation between Varonis Systems and Nextnav Acquisition

Given the investment horizon of 90 days Varonis Systems is expected to under-perform the Nextnav Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Varonis Systems is 1.73 times less risky than Nextnav Acquisition. The stock trades about -0.09 of its potential returns per unit of risk. The Nextnav Acquisition Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  696.00  in Nextnav Acquisition Corp on August 23, 2024 and sell it today you would earn a total of  839.00  from holding Nextnav Acquisition Corp or generate 120.55% return on investment over 90 days.

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

Varonis Systems  vs.  Nextnav Acquisition Corp

Varonis Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Varonis Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nextnav Acquisition Corp

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nextnav Acquisition Corp are ranked lower than 27 (%) 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.

Pair Trading with Varonis Systems and Nextnav Acquisition

The main advantage of trading using opposite Varonis Systems and Nextnav Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Varonis Systems 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 Varonis Systems 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.