Correlation Between Amgen and PSQ Holdings

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

By analyzing existing cross correlation between Amgen Inc and PSQ Holdings, you can compare the effects of market volatilities on Amgen and PSQ Holdings 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 Amgen with a short position of PSQ Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and PSQ Holdings.

Diversification Opportunities for Amgen and PSQ Holdings

-0.54

Correlation Coefficient

Amgen  PSQ Holdings

Excellent diversification

The 3 months correlation between Amgen and PSQ is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and PSQ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSQ Holdings and Amgen 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 Amgen Inc are associated (or correlated) with PSQ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSQ Holdings has no effect on the direction of Amgen i.e., Amgen and PSQ Holdings go up and down completely randomly.

Pair Corralation between Amgen and PSQ Holdings

Given the investment horizon of 90 days Amgen Inc is expected to under-perform the PSQ Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Amgen Inc is 16.49 times less risky than PSQ Holdings. The stock trades about -0.07 of its potential returns per unit of risk. The PSQ Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  342.00  in PSQ Holdings on October 1, 2024 and sell it today you would earn a total of  157.00  from holding PSQ Holdings or generate 45.91% return on investment over 90 days.

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

Amgen Inc  vs.  PSQ Holdings

Amgen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amgen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

PSQ Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSQ Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, PSQ Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Amgen and PSQ Holdings

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

The idea behind Amgen Inc and PSQ Holdings 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.