Correlation Between Waldencast Acquisition and Boardwalktech Software

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

Diversification Opportunities for Waldencast Acquisition and Boardwalktech Software

-0.23

Correlation Coefficient

Waldencast Acquisition  Boardwalktech Software

Very good diversification

The 3 months correlation between Waldencast and Boardwalktech is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Boardwalktech Software Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boardwalktech Software 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 Boardwalktech Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boardwalktech Software has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Boardwalktech Software go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Boardwalktech Software

Given the investment horizon of 90 days Waldencast Acquisition is expected to generate 4.6 times less return on investment than Boardwalktech Software. But when comparing it to its historical volatility, Waldencast Acquisition Corp is 2.99 times less risky than Boardwalktech Software. It trades about 0.02 of its potential returns per unit of risk. Boardwalktech Software Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9.20  in Boardwalktech Software Corp on December 1, 2024 and sell it today you would lose (1.00) from holding Boardwalktech Software Corp or give up 10.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  Boardwalktech Software Corp

Waldencast Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Waldencast Acquisition is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Boardwalktech Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Boardwalktech Software Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward-looking signals, Boardwalktech Software reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waldencast Acquisition and Boardwalktech Software

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

The idea behind Waldencast Acquisition Corp and Boardwalktech Software 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.