Correlation Between Waldencast Acquisition and Veru

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

Diversification Opportunities for Waldencast Acquisition and Veru

-0.16

Correlation Coefficient

Waldencast Acquisition  Veru

Good diversification

The 3 months correlation between Waldencast and Veru is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Waldencast Acquisition Corp and Veru Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veru 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 Veru. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veru Inc has no effect on the direction of Waldencast Acquisition i.e., Waldencast Acquisition and Veru go up and down completely randomly.

Pair Corralation between Waldencast Acquisition and Veru

Given the investment horizon of 90 days Waldencast Acquisition Corp is expected to generate 1.33 times more return on investment than Veru. However, Waldencast Acquisition is 1.33 times more volatile than Veru Inc. It trades about 0.12 of its potential returns per unit of risk. Veru Inc is currently generating about -0.04 per unit of risk. If you would invest  260.00  in Waldencast Acquisition Corp on August 12, 2024 and sell it today you would earn a total of  94.00  from holding Waldencast Acquisition Corp or generate 36.15% return on investment over 90 days.

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

Waldencast Acquisition Corp  vs.  Veru Inc

Waldencast Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waldencast Acquisition Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, Waldencast Acquisition exhibited solid returns over the last few months and may actually be approaching a breakup point.

Veru Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veru Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Waldencast Acquisition and Veru

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

The idea behind Waldencast Acquisition Corp and Veru 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.