Correlation Between Where Food and Waldencast Acquisition

Can any of the company-specific risk be diversified away by investing in both Where Food and Waldencast Acquisition 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 Where Food and Waldencast Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Where Food Comes and Waldencast Acquisition Corp, you can compare the effects of market volatilities on Where Food and Waldencast Acquisition 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 Where Food with a short position of Waldencast Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Where Food and Waldencast Acquisition.

Diversification Opportunities for Where Food and Waldencast Acquisition

-0.02

Correlation Coefficient

Where Food  Waldencast Acquisition

Good diversification

The 3 months correlation between Where and Waldencast is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Where Food Comes and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and Where Food 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 Where Food Comes are associated (or correlated) with Waldencast Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waldencast Acquisition has no effect on the direction of Where Food i.e., Where Food and Waldencast Acquisition go up and down completely randomly.

Pair Corralation between Where Food and Waldencast Acquisition

Given the investment horizon of 90 days Where Food Comes is expected to under-perform the Waldencast Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Where Food Comes is 3.31 times less risky than Waldencast Acquisition. The stock trades about -0.08 of its potential returns per unit of risk. The Waldencast Acquisition Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Where Food Comes  vs.  Waldencast Acquisition Corp

Where Food Comes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Where Food Comes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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.

Pair Trading with Where Food and Waldencast Acquisition

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

The idea behind Where Food Comes and Waldencast Acquisition Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.