Correlation Between Waldencast Acquisition and ON24

Can any of the company-specific risk be diversified away by investing in both Waldencast Acquisition and ON24 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 ON24 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 ON24 Inc, you can compare the effects of market volatilities on Waldencast Acquisition and ON24 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 ON24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waldencast Acquisition and ON24.

Diversification Opportunities for Waldencast Acquisition and ON24

-0.38

Correlation Coefficient

Waldencast Acquisition  ON24

Very good diversification

The 3 months correlation between Waldencast and ON24 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and ON24 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON24 Inc 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 ON24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON24 Inc has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and ON24 go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and ON24

Assuming the 90 days horizon Waldencast Acquisition Corp is expected to generate 5.26 times more return on investment than ON24. However, Waldencast Acquisition is 5.26 times more volatile than ON24 Inc. It trades about 0.04 of its potential returns per unit of risk. ON24 Inc is currently generating about 0.04 per unit of risk. If you would invest  12.00  in Waldencast Acquisition Corp on September 3, 2024 and sell it today you would lose (1.00) from holding Waldencast Acquisition Corp or give up 8.33% of portfolio value over 90 days.

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

Waldencast Acquisition Corp  vs.  ON24 Inc

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 fairly unsteady fundamental indicators, Waldencast Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

ON24 Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ON24 Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ON24 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Waldencast Acquisition and ON24

The main advantage of trading using opposite Waldencast Acquisition and ON24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waldencast Acquisition position performs unexpectedly, ON24 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 ON24 will offset losses from the drop in ON24's long position.

The idea behind Waldencast Acquisition Corp and ON24 Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.