Correlation Between Waldencast Acquisition and United Guardian
Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and United Guardian 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 United Guardian 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 United Guardian, you can compare the effects of market volatilities on Waldencast Acquisition and United Guardian 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 United Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and United Guardian.
Diversification Opportunities for Waldencast Acquisition and United Guardian
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Waldencast and United is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and United Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Guardian 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 United Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Guardian has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and United Guardian go up and down completely randomly.
Pair Corralation between Waldencast Acquisition and United Guardian
Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 3.89 times more return on investment than United Guardian. However, Waldencast Acquisition is 3.89 times more volatile than United Guardian. It trades about 0.03 of its potential returns per unit of risk. United Guardian is currently generating about 0.01 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 | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Waldencast Acquisition Corp vs. United Guardian
Performance |
| Timeline |
| Waldencast Acquisition |
| United Guardian |
Waldencast Acquisition and United Guardian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waldencast Acquisition and United Guardian
The main advantage of trading using opposite Waldencast Acquisition and United Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, United Guardian 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 United Guardian will offset losses from the drop in United Guardian'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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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