Correlation Between Waldencast Acquisition and XMReality

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

Diversification Opportunities for Waldencast Acquisition and XMReality

0.0

Correlation Coefficient

Waldencast Acquisition  XMReality

Pay attention - limited upside

The 3 months correlation between Waldencast and XMReality is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and XMReality AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMReality AB 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 XMReality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMReality AB has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and XMReality go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and XMReality

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to generate 0.9 times more return on investment than XMReality. However, Waldencast Acquisition Corp is 1.11 times less risky than XMReality. It trades about -0.02 of its potential returns per unit of risk. XMReality AB is currently generating about -0.06 per unit of risk. If you would invest  832.00  in Waldencast Acquisition Corp on October 14, 2024 and sell it today you would lose (539.00) from holding Waldencast Acquisition Corp or give up 64.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  XMReality AB

Waldencast Acquisition

Risk-Adjusted Performance

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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.

XMReality AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XMReality AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, XMReality is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Waldencast Acquisition and XMReality

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

The idea behind Waldencast Acquisition Corp and XMReality AB 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.