Correlation Between Waldencast Acquisition and Versus Systems

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

Diversification Opportunities for Waldencast Acquisition and Versus Systems

0.03

Correlation Coefficient

Waldencast Acquisition  Versus Systems

Significant diversification

The 3 months correlation between Waldencast and Versus is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Versus Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Versus Systems 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 Versus Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Versus Systems has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Versus Systems go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Versus Systems

Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 1.28 times more return on investment than Versus Systems. However, Waldencast Acquisition is 1.28 times more volatile than Versus Systems. It trades about 0.04 of its potential returns per unit of risk. Versus Systems is currently generating about 0.03 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	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  Versus Systems

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.

Versus Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Versus Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Versus Systems may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Waldencast Acquisition and Versus Systems

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

The idea behind Waldencast Acquisition Corp and Versus Systems 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.