Correlation Between Bentley Systems and Waldencast Acquisition

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

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

Diversification Opportunities for Bentley Systems and Waldencast Acquisition

0.03

Correlation Coefficient

Bentley Systems  Waldencast Acquisition

Significant diversification

The 3 months correlation between Bentley and Waldencast is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bentley Systems and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and Bentley Systems 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 Bentley Systems 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 Bentley Systems i.e., Bentley Systems and Waldencast Acquisition go up and down completely randomly.

Pair Corralation between Bentley Systems and Waldencast Acquisition

Considering the 90-day investment horizon Bentley Systems is expected to generate 7.9 times less return on investment than Waldencast Acquisition. But when comparing it to its historical volatility, Bentley Systems is 2.85 times less risky than Waldencast Acquisition. It trades about 0.02 of its potential returns per unit of risk. Waldencast Acquisition Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  301.00  in Waldencast Acquisition Corp on August 31, 2024 and sell it today you would earn a total of  28.00  from holding Waldencast Acquisition Corp or generate 9.3% return on investment over 90 days.

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

Bentley Systems  vs.  Waldencast Acquisition Corp

Bentley Systems

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bentley Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bentley Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Waldencast Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Waldencast Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bentley Systems and Waldencast Acquisition

The main advantage of trading using opposite Bentley Systems and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bentley Systems 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 Bentley Systems 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.