Correlation Between Waldencast Acquisition and Liquid Avatar

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

Diversification Opportunities for Waldencast Acquisition and Liquid Avatar

0.29

Correlation Coefficient

Waldencast Acquisition  Liquid Avatar

Modest diversification

The 3 months correlation between Waldencast and Liquid is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Liquid Avatar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquid Avatar Techno 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 Liquid Avatar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquid Avatar Techno has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Liquid Avatar go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Liquid Avatar

If you would invest  344.00  in Waldencast Acquisition Corp on September 22, 2024 and sell it today you would earn a total of  21.00  from holding Waldencast Acquisition Corp or generate 6.1% return on investment over 90 days.

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

Waldencast Acquisition Corp  vs.  Liquid Avatar Technologies

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 rather sound essential indicators, Waldencast Acquisition is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Liquid Avatar Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liquid Avatar Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Waldencast Acquisition and Liquid Avatar

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

The idea behind Waldencast Acquisition Corp and Liquid Avatar Technologies 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.