Correlation Between Waldencast Acquisition and Appfolio

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

Diversification Opportunities for Waldencast Acquisition and Appfolio

0.4

Correlation Coefficient

Waldencast Acquisition  Appfolio

Very weak diversification

The 3 months correlation between Waldencast and Appfolio is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Appfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appfolio 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 Appfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appfolio has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Appfolio go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Appfolio

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the Appfolio. In addition to that, Waldencast Acquisition is 1.59 times more volatile than Appfolio. It trades about -0.12 of its total potential returns per unit of risk. Appfolio is currently generating about -0.07 per unit of volatility. If you would invest  24,672  in Appfolio on December 31, 2024 and sell it today you would lose (2,542) from holding Appfolio or give up 10.3% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  Appfolio

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 weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 latest weak 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 Appfolio

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

The idea behind Waldencast Acquisition Corp and Appfolio 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.