Correlation Between Waldencast Acquisition and Sprout Social
Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and Sprout Social 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 Waldencast Acquisition and Sprout Social into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waldencast Acquisition Corp and Sprout Social, you can compare the effects of market volatilities on Waldencast Acquisition and Sprout Social 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 Waldencast Acquisition with a short position of Sprout Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and Sprout Social.
Diversification Opportunities for Waldencast Acquisition and Sprout Social
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waldencast and Sprout is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Sprout Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprout Social and Waldencast Acquisition 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 Waldencast Acquisition Corp are associated (or correlated) with Sprout Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprout Social has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Sprout Social go up and down completely randomly.
Pair Corralation between Waldencast Acquisition and Sprout Social
Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the Sprout Social. But the stock apears to be less risky and, when comparing its historical volatility, Waldencast Acquisition Corp is 1.08 times less risky than Sprout Social. The stock trades about -0.15 of its potential returns per unit of risk. The Sprout Social is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,710 in Sprout Social on August 28, 2024 and sell it today you would earn a total of 579.00 from holding Sprout Social or generate 21.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waldencast Acquisition Corp vs. Sprout Social
Performance |
| Timeline |
| Waldencast Acquisition |
| Sprout Social |
Waldencast Acquisition and Sprout Social Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waldencast Acquisition and Sprout Social
The main advantage of trading using opposite Waldencast Acquisition and Sprout Social positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, Sprout Social 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 Sprout Social will offset losses from the drop in Sprout Social's long position.| Waldencast Acquisition vs. Where Food Comes | Waldencast Acquisition vs. VTEX | Waldencast Acquisition vs. Vertex | Waldencast Acquisition vs. BASE Inc |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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