Correlation Between Waldencast Acquisition and TROOPS

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

Diversification Opportunities for Waldencast Acquisition and TROOPS

0.0

Correlation Coefficient

Waldencast Acquisition  TROOPS

Pay attention - limited upside

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

Pair Corralation between Waldencast Acquisition and TROOPS

Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 1.6 times more return on investment than TROOPS. However, Waldencast Acquisition is 1.6 times more volatile than TROOPS Inc. It trades about 0.04 of its potential returns per unit of risk. TROOPS Inc is currently generating about -0.19 per unit of risk. If you would invest  17.00  in Waldencast Acquisition Corp on December 30, 2024 and sell it today you would lose (1.00) from holding Waldencast Acquisition Corp or give up 5.88% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  TROOPS Inc

Waldencast Acquisition

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 2 (%) 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.

TROOPS Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TROOPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Waldencast Acquisition and TROOPS

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

The idea behind Waldencast Acquisition Corp and TROOPS Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.