Correlation Between ODDITY Tech and Waldencast Acquisition
Can any of the company-specific risk be diversified away by investing in both ODDITY Tech 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 ODDITY Tech and Waldencast Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ODDITY Tech Ltd and Waldencast Acquisition Corp, you can compare the effects of market volatilities on ODDITY Tech 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 ODDITY Tech with a short position of Waldencast Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of ODDITY Tech and Waldencast Acquisition.
Diversification Opportunities for ODDITY Tech and Waldencast Acquisition
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ODDITY and Waldencast is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ODDITY Tech Ltd and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and ODDITY Tech 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 ODDITY Tech Ltd 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 ODDITY Tech i.e., ODDITY Tech and Waldencast Acquisition go up and down completely randomly.
Pair Corralation between ODDITY Tech and Waldencast Acquisition
Considering the 90-day investment horizon ODDITY Tech Ltd is expected to generate 0.31 times more return on investment than Waldencast Acquisition. However, ODDITY Tech Ltd is 3.21 times less risky than Waldencast Acquisition. It trades about 0.19 of its potential returns per unit of risk. Waldencast Acquisition Corp is currently generating about 0.03 per unit of risk. If you would invest 3,970 in ODDITY Tech Ltd on August 27, 2024 and sell it today you would earn a total of 586.00 from holding ODDITY Tech Ltd or generate 14.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ODDITY Tech Ltd vs. Waldencast Acquisition Corp
Performance |
| Timeline |
| ODDITY Tech |
| Waldencast Acquisition |
ODDITY Tech and Waldencast Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ODDITY Tech and Waldencast Acquisition
The main advantage of trading using opposite ODDITY Tech and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ODDITY Tech 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.| ODDITY Tech vs. Colgate Palmolive | ODDITY Tech vs. Estee Lauder Companies | ODDITY Tech vs. Procter Gamble | ODDITY Tech vs. United Guardian |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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