Correlation Between Sustainable Development and Waldencast Acquisition

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

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

Diversification Opportunities for Sustainable Development and Waldencast Acquisition

-0.28

Correlation Coefficient

Sustainable Development  Waldencast Acquisition

Very good diversification

The 3 months correlation between Sustainable and Waldencast is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sustainable Development Acquis and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and Sustainable Development 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 Sustainable Development Acquisition 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 Sustainable Development i.e., Sustainable Development and Waldencast Acquisition go up and down completely randomly.

Pair Corralation between Sustainable Development and Waldencast Acquisition

If you would invest  11.00  in Waldencast Acquisition Corp on October 12, 2024 and sell it today you would earn a total of  4.00  from holding Waldencast Acquisition Corp or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

Sustainable Development Acquis  vs.  Waldencast Acquisition Corp

Sustainable Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sustainable Development Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Sustainable Development is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Waldencast Acquisition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Waldencast Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sustainable Development and Waldencast Acquisition

The main advantage of trading using opposite Sustainable Development and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sustainable Development 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 Sustainable Development Acquisition 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.