Correlation Between Waldencast Acquisition and Movella Holdings

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

Diversification Opportunities for Waldencast Acquisition and Movella Holdings

0.0

Correlation Coefficient

Waldencast Acquisition  Movella Holdings

Pay attention - limited upside

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

Pair Corralation between Waldencast Acquisition and Movella Holdings

If you would invest  11.00  in Waldencast Acquisition Corp on November 28, 2024 and sell it today you would earn a total of  3.00  from holding Waldencast Acquisition Corp or generate 27.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  Movella Holdings

Waldencast Acquisition

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Waldencast Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Movella Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Movella Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Movella Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Waldencast Acquisition and Movella Holdings

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

The idea behind Waldencast Acquisition Corp and Movella Holdings 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 Global Correlations module to find global opportunities by holding instruments from different markets.