Correlation Between Appfolio and Waldencast Acquisition

Can any of the company-specific risk be diversified away by investing in both Appfolio and Waldencast Acquisition 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 Appfolio and Waldencast Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Appfolio and Waldencast Acquisition Corp, you can compare the effects of market volatilities on Appfolio and Waldencast Acquisition 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 Appfolio with a short position of Waldencast Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appfolio and Waldencast Acquisition.

Diversification Opportunities for Appfolio and Waldencast Acquisition

0.28

Correlation Coefficient

Appfolio  Waldencast Acquisition

Modest diversification

The 3 months correlation between Appfolio and Waldencast is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Appfolio and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and Appfolio 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 Appfolio are associated (or correlated) with Waldencast Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waldencast Acquisition has no effect on the direction of Appfolio i.e., Appfolio and Waldencast Acquisition go up and down completely randomly.

Pair Corralation between Appfolio and Waldencast Acquisition

Given the investment horizon of 90 days Appfolio is expected to under-perform the Waldencast Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Appfolio is 1.86 times less risky than Waldencast Acquisition. The stock trades about -0.13 of its potential returns per unit of risk. The Waldencast Acquisition Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  338.00  in Waldencast Acquisition Corp on November 29, 2024 and sell it today you would lose (37.00) from holding Waldencast Acquisition Corp or give up 10.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Appfolio  vs.  Waldencast Acquisition Corp

Appfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Appfolio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Waldencast Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Waldencast Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Appfolio and Waldencast Acquisition

The main advantage of trading using opposite Appfolio and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appfolio position performs unexpectedly, Waldencast Acquisition 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 Waldencast Acquisition will offset losses from the drop in Waldencast Acquisition's long position.

The idea behind Appfolio and Waldencast Acquisition Corp 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.