Correlation Between Waldencast Acquisition and Lifevantage

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

Diversification Opportunities for Waldencast Acquisition and Lifevantage

-0.72

Correlation Coefficient

Waldencast Acquisition  Lifevantage

Pay attention - limited upside

The 3 months correlation between Waldencast and Lifevantage is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Lifevantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifevantage 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 Lifevantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifevantage has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Lifevantage go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Lifevantage

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the Lifevantage. But the stock apears to be less risky and, when comparing its historical volatility, Waldencast Acquisition Corp is 1.09 times less risky than Lifevantage. The stock trades about -0.06 of its potential returns per unit of risk. The Lifevantage is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,047  in Lifevantage on September 13, 2024 and sell it today you would earn a total of  478.00  from holding Lifevantage or generate 45.65% return on investment over 90 days.

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

Waldencast Acquisition Corp  vs.  Lifevantage

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

Lifevantage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifevantage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Lifevantage displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waldencast Acquisition and Lifevantage

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

The idea behind Waldencast Acquisition Corp and Lifevantage 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.