Correlation Between Waldencast Acquisition and Adcore

Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and Adcore 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 Adcore 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 Adcore Inc, you can compare the effects of market volatilities on Waldencast Acquisition and Adcore 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 Adcore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and Adcore.

Diversification Opportunities for Waldencast Acquisition and Adcore

-0.12

Correlation Coefficient

Waldencast Acquisition  Adcore

Good diversification

The 3 months correlation between Waldencast and Adcore is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Adcore Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adcore Inc 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 Adcore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adcore Inc has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Adcore go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Adcore

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to generate 0.95 times more return on investment than Adcore. However, Waldencast Acquisition Corp is 1.05 times less risky than Adcore. It trades about 0.01 of its potential returns per unit of risk. Adcore Inc is currently generating about -0.05 per unit of risk. If you would invest  391.00  in Waldencast Acquisition Corp on September 23, 2024 and sell it today you would lose (26.00) from holding Waldencast Acquisition Corp or give up 6.65% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  Adcore Inc

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.

Adcore Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adcore Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Waldencast Acquisition and Adcore

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

The idea behind Waldencast Acquisition Corp and Adcore Inc 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.