Correlation Between Waldencast Acquisition and Broadleaf

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

Diversification Opportunities for Waldencast Acquisition and Broadleaf

-0.11

Correlation Coefficient

Waldencast Acquisition  Broadleaf

Good diversification

The 3 months correlation between Waldencast and Broadleaf is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Broadleaf Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadleaf 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 Broadleaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadleaf has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Broadleaf go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Broadleaf

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the Broadleaf. In addition to that, Waldencast Acquisition is 1.65 times more volatile than Broadleaf Co. It trades about -0.02 of its total potential returns per unit of risk. Broadleaf Co is currently generating about 0.05 per unit of volatility. If you would invest  308.00  in Broadleaf Co on October 13, 2024 and sell it today you would earn a total of  200.00  from holding Broadleaf Co or generate 64.94% return on investment over 90 days.

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

Waldencast Acquisition Corp  vs.  Broadleaf Co

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 latest weak performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Broadleaf

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadleaf Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Broadleaf is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Waldencast Acquisition and Broadleaf

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

The idea behind Waldencast Acquisition Corp and Broadleaf Co 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.