Correlation Between Waldencast Acquisition and Unilever PLC
Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and Unilever PLC 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 Unilever PLC 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 Unilever PLC ADR, you can compare the effects of market volatilities on Waldencast Acquisition and Unilever PLC 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 Unilever PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and Unilever PLC.
Diversification Opportunities for Waldencast Acquisition and Unilever PLC
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Waldencast and Unilever is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Unilever PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever PLC ADR 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 Unilever PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever PLC ADR has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Unilever PLC go up and down completely randomly.
Pair Corralation between Waldencast Acquisition and Unilever PLC
Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 13.01 times more return on investment than Unilever PLC. However, Waldencast Acquisition is 13.01 times more volatile than Unilever PLC ADR. It trades about 0.03 of its potential returns per unit of risk. Unilever PLC ADR is currently generating about 0.05 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. Unilever PLC ADR
Performance |
| Timeline |
| Waldencast Acquisition |
| Unilever PLC ADR |
Waldencast Acquisition and Unilever PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waldencast Acquisition and Unilever PLC
The main advantage of trading using opposite Waldencast Acquisition and Unilever PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, Unilever PLC 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 Unilever PLC will offset losses from the drop in Unilever PLC'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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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