Correlation Between European Wax and Waldencast Acquisition
Can any of the company-specific risk be diversified away by investing in both European Wax and Waldencast 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 European Wax and Waldencast Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Wax Center and Waldencast Acquisition Corp, you can compare the effects of market volatilities on European Wax and Waldencast 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 European Wax with a short position of Waldencast Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Wax and Waldencast Acquisition.
Diversification Opportunities for European Wax and Waldencast Acquisition
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between European and Waldencast is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and European Wax 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 European Wax Center are associated (or correlated) with Waldencast Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waldencast Acquisition has no effect on the direction of European Wax i.e., European Wax and Waldencast Acquisition go up and down completely randomly.
Pair Corralation between European Wax and Waldencast Acquisition
Given the investment horizon of 90 days European Wax Center is expected to under-perform the Waldencast Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, European Wax Center is 3.55 times less risky than Waldencast Acquisition. The stock trades about -0.03 of its potential returns per unit of risk. The Waldencast Acquisition Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 74.00 in Waldencast Acquisition Corp on August 28, 2024 and sell it today you would lose (60.00) from holding Waldencast Acquisition Corp or give up 81.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Wax Center vs. Waldencast Acquisition Corp
Performance |
| Timeline |
| European Wax Center |
| Waldencast Acquisition |
European Wax and Waldencast Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Wax and Waldencast Acquisition
The main advantage of trading using opposite European Wax and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax position performs unexpectedly, Waldencast 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 Waldencast Acquisition will offset losses from the drop in Waldencast Acquisition's long position.| European Wax vs. Edgewell Personal Care | European Wax vs. Inter Parfums | European Wax vs. Henkel AG Co | European Wax vs. Mannatech Incorporated |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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