Correlation Between Waldencast Acquisition and Moovly Media

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

Diversification Opportunities for Waldencast Acquisition and Moovly Media

0.26

Correlation Coefficient

Waldencast Acquisition  Moovly Media

Modest diversification

The 3 months correlation between Waldencast and Moovly is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Moovly Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moovly Media 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 Moovly Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moovly Media has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Moovly Media go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Moovly Media

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to generate 0.26 times more return on investment than Moovly Media. However, Waldencast Acquisition Corp is 3.83 times less risky than Moovly Media. It trades about 0.06 of its potential returns per unit of risk. Moovly Media is currently generating about -0.01 per unit of risk. If you would invest  301.00  in Waldencast Acquisition Corp on September 1, 2024 and sell it today you would earn a total of  37.00  from holding Waldencast Acquisition Corp or generate 12.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Waldencast Acquisition Corp  vs.  Moovly Media

Waldencast Acquisition

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Waldencast Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

Moovly Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moovly Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Waldencast Acquisition and Moovly Media

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

The idea behind Waldencast Acquisition Corp and Moovly Media 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.