Correlation Between Waldencast Acquisition and Bentley Systems

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

Diversification Opportunities for Waldencast Acquisition and Bentley Systems

0.19

Correlation Coefficient

Waldencast Acquisition  Bentley Systems

Average diversification

The 3 months correlation between Waldencast and Bentley is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Bentley Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentley Systems 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 Bentley Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentley Systems has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Bentley Systems go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Bentley Systems

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to generate 2.57 times more return on investment than Bentley Systems. However, Waldencast Acquisition is 2.57 times more volatile than Bentley Systems. It trades about -0.03 of its potential returns per unit of risk. Bentley Systems is currently generating about -0.11 per unit of risk. If you would invest  338.00  in Waldencast Acquisition Corp on November 29, 2024 and sell it today you would lose (37.00) from holding Waldencast Acquisition Corp or give up 10.95% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  Bentley Systems

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 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.

Bentley Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bentley Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Waldencast Acquisition and Bentley Systems

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

The idea behind Waldencast Acquisition Corp and Bentley Systems 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.