Correlation Between Waldencast Acquisition and Procter Gamble

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

Diversification Opportunities for Waldencast Acquisition and Procter Gamble

0.28

Correlation Coefficient

Waldencast Acquisition  Procter Gamble

Modest diversification

The 3 months correlation between Waldencast and Procter is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Procter Gamble go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Procter Gamble

Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 15.94 times more return on investment than Procter Gamble. However, Waldencast Acquisition is 15.94 times more volatile than Procter Gamble. It trades about 0.01 of its potential returns per unit of risk. Procter Gamble is currently generating about 0.02 per unit of risk. If you would invest  41.00  in Waldencast Acquisition Corp on August 2, 2024 and sell it today you would lose (28.00) from holding Waldencast Acquisition Corp or give up 68.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  Procter Gamble

Waldencast Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 5 (%) 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.

Procter Gamble

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Waldencast Acquisition and Procter Gamble

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

The idea behind Waldencast Acquisition Corp and Procter Gamble 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..