Correlation Between Waldencast Acquisition and WD 40
Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and WD 40 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 WD 40 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 WD 40 Company, you can compare the effects of market volatilities on Waldencast Acquisition and WD 40 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 WD 40. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and WD 40.
Diversification Opportunities for Waldencast Acquisition and WD 40
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Waldencast and WDFC is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and WD 40 Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WD 40 Company 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 WD 40. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WD 40 Company has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and WD 40 go up and down completely randomly.
Pair Corralation between Waldencast Acquisition and WD 40
Assuming the 90 days horizon Waldencast Acquisition is expected to generate 17.18 times less return on investment than WD 40. In addition to that, Waldencast Acquisition is 8.21 times more volatile than WD 40 Company. It trades about 0.0 of its total potential returns per unit of risk. WD 40 Company is currently generating about 0.11 per unit of volatility. If you would invest 26,440 in WD 40 Company on August 31, 2024 and sell it today you would earn a total of 987.00 from holding WD 40 Company or generate 3.73% 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. WD 40 Company
Performance |
| Timeline |
| Waldencast Acquisition |
| WD 40 Company |
Waldencast Acquisition and WD 40 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waldencast Acquisition and WD 40
The main advantage of trading using opposite Waldencast Acquisition and WD 40 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, WD 40 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 WD 40 will offset losses from the drop in WD 40's long position.The idea behind Waldencast Acquisition Corp and WD 40 Company pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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