Correlation Between Waldencast Acquisition and Xos Equity
Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and Xos Equity 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 Xos Equity 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 Xos Equity Warrants, you can compare the effects of market volatilities on Waldencast Acquisition and Xos Equity 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 Xos Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and Xos Equity.
Diversification Opportunities for Waldencast Acquisition and Xos Equity
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Waldencast and Xos is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants 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 Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Xos Equity go up and down completely randomly.
Pair Corralation between Waldencast Acquisition and Xos Equity
Assuming the 90 days horizon Waldencast Acquisition Corp is expected to under-perform the Xos Equity. But the stock apears to be less risky and, when comparing its historical volatility, Waldencast Acquisition Corp is 7.62 times less risky than Xos Equity. The stock trades about 0.0 of its potential returns per unit of risk. The Xos Equity Warrants is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.44 in Xos Equity Warrants on September 1, 2024 and sell it today you would lose (2.02) from holding Xos Equity Warrants or give up 82.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.49% |
| Values | Daily Returns |
Waldencast Acquisition Corp vs. Xos Equity Warrants
Performance |
| Timeline |
| Waldencast Acquisition |
| Xos Equity Warrants |
Waldencast Acquisition and Xos Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waldencast Acquisition and Xos Equity
The main advantage of trading using opposite Waldencast Acquisition and Xos Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, Xos Equity 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 Xos Equity will offset losses from the drop in Xos Equity's long position.The idea behind Waldencast Acquisition Corp and Xos Equity Warrants 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.| Xos Equity vs. Ford Motor | Xos Equity vs. General Motors | Xos Equity vs. Goodyear Tire Rubber | Xos Equity vs. Li Auto |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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