Correlation Between Waldencast Acquisition and Paycor HCM

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

Diversification Opportunities for Waldencast Acquisition and Paycor HCM

-0.36

Correlation Coefficient

Waldencast Acquisition  Paycor HCM

Very good diversification

The 3 months correlation between Waldencast and Paycor is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Paycor HCM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycor HCM 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 Paycor HCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycor HCM has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Paycor HCM go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Paycor HCM

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to under-perform the Paycor HCM. In addition to that, Waldencast Acquisition is 1.17 times more volatile than Paycor HCM. It trades about -0.03 of its total potential returns per unit of risk. Paycor HCM is currently generating about 0.12 per unit of volatility. If you would invest  1,806  in Paycor HCM on November 29, 2024 and sell it today you would earn a total of  409.00  from holding Paycor HCM or generate 22.65% return on investment over 90 days.

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

Waldencast Acquisition Corp  vs.  Paycor HCM

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.

Paycor HCM

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paycor HCM are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Paycor HCM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Waldencast Acquisition and Paycor HCM

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

The idea behind Waldencast Acquisition Corp and Paycor HCM 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.