Correlation Between Liquid Avatar and Waldencast Acquisition

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

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

Diversification Opportunities for Liquid Avatar and Waldencast Acquisition

0.29

Correlation Coefficient

Liquid Avatar  Waldencast Acquisition

Modest diversification

The 3 months correlation between Liquid and Waldencast is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Liquid Avatar Technologies and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and Liquid Avatar 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 Liquid Avatar Technologies 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 Liquid Avatar i.e., Liquid Avatar and Waldencast Acquisition go up and down completely randomly.

Pair Corralation between Liquid Avatar and Waldencast Acquisition

Assuming the 90 days horizon Liquid Avatar Technologies is expected to under-perform the Waldencast Acquisition. In addition to that, Liquid Avatar is 2.06 times more volatile than Waldencast Acquisition Corp. It trades about -0.09 of its total potential returns per unit of risk. Waldencast Acquisition Corp is currently generating about 0.0 per unit of volatility. If you would invest  404.00  in Waldencast Acquisition Corp on September 22, 2024 and sell it today you would lose (39.00) from holding Waldencast Acquisition Corp or give up 9.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.22%
Values	Daily Returns

Liquid Avatar Technologies  vs.  Waldencast Acquisition Corp

Liquid Avatar Techno

Risk-Adjusted Performance

0 of 100

Very Weak

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

Waldencast Acquisition

Risk-Adjusted Performance

0 of 100

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 rather sound essential indicators, Waldencast Acquisition is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Liquid Avatar and Waldencast Acquisition

The main advantage of trading using opposite Liquid Avatar and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquid Avatar 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 Liquid Avatar Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.