Correlation Between Waldencast Acquisition and Estee Lauder
Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and Estee Lauder 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 Estee Lauder 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 Estee Lauder Companies, you can compare the effects of market volatilities on Waldencast Acquisition and Estee Lauder 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 Estee Lauder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and Estee Lauder.
Diversification Opportunities for Waldencast Acquisition and Estee Lauder
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Waldencast and Estee is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Estee Lauder Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estee Lauder Companies 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 Estee Lauder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estee Lauder Companies has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Estee Lauder go up and down completely randomly.
Pair Corralation between Waldencast Acquisition and Estee Lauder
Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 4.65 times more return on investment than Estee Lauder. However, Waldencast Acquisition is 4.65 times more volatile than Estee Lauder Companies. It trades about 0.03 of its potential returns per unit of risk. Estee Lauder Companies is currently generating about -0.07 per unit of risk. If you would invest 74.00 in Waldencast Acquisition Corp on August 24, 2024 and sell it today you would lose (60.10) from holding Waldencast Acquisition Corp or give up 81.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Waldencast Acquisition Corp vs. Estee Lauder Companies
Performance |
| Timeline |
| Waldencast Acquisition |
| Estee Lauder Companies |
Waldencast Acquisition and Estee Lauder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waldencast Acquisition and Estee Lauder
The main advantage of trading using opposite Waldencast Acquisition and Estee Lauder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, Estee Lauder 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 Estee Lauder will offset losses from the drop in Estee Lauder's long position.| Waldencast Acquisition vs. Where Food Comes | Waldencast Acquisition vs. VTEX | Waldencast Acquisition vs. Vertex | Waldencast Acquisition vs. BASE Inc |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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