Correlation Between Waldencast Acquisition and Domo

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

Diversification Opportunities for Waldencast Acquisition and Domo

-0.12

Correlation Coefficient

Waldencast Acquisition  Domo

Good diversification

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

Pair Corralation between Waldencast Acquisition and Domo

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the Domo. In addition to that, Waldencast Acquisition is 1.18 times more volatile than Domo Inc. It trades about -0.03 of its total potential returns per unit of risk. Domo Inc is currently generating about -0.01 per unit of volatility. If you would invest  767.00  in Domo Inc on October 24, 2024 and sell it today you would lose (41.00) from holding Domo Inc or give up 5.35% 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.  Domo 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 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.

Domo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Domo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Domo is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Waldencast Acquisition and Domo

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

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