Correlation Between Broadleaf and Waldencast Acquisition

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

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

Diversification Opportunities for Broadleaf and Waldencast Acquisition

-0.36

Correlation Coefficient

Broadleaf  Waldencast Acquisition

Very good diversification

The 3 months correlation between Broadleaf and Waldencast is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Broadleaf Co and Waldencast Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waldencast Acquisition and Broadleaf 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 Broadleaf Co 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 Broadleaf i.e., Broadleaf and Waldencast Acquisition go up and down completely randomly.

Pair Corralation between Broadleaf and Waldencast Acquisition

If you would invest  372.00  in Waldencast Acquisition Corp on September 25, 2024 and sell it today you would earn a total of  25.00  from holding Waldencast Acquisition Corp or generate 6.72% return on investment over 90 days.

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

Broadleaf Co  vs.  Waldencast Acquisition Corp

Broadleaf

Risk-Adjusted Performance

0 of 100

Very Weak

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

Waldencast Acquisition

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Waldencast Acquisition may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Broadleaf and Waldencast Acquisition

The main advantage of trading using opposite Broadleaf and Waldencast Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadleaf 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 Broadleaf Co 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.