Correlation Between PSQ Holdings and Gulf Island

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

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

Diversification Opportunities for PSQ Holdings and Gulf Island

0.4

Correlation Coefficient

PSQ Holdings  Gulf Island

Very weak diversification

The 3 months correlation between PSQ and Gulf is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and Gulf Island Fabrication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gulf Island Fabrication and PSQ Holdings 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 PSQ Holdings are associated (or correlated) with Gulf Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gulf Island Fabrication has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and Gulf Island go up and down completely randomly.

Pair Corralation between PSQ Holdings and Gulf Island

Given the investment horizon of 90 days PSQ Holdings is expected to generate 10.77 times more return on investment than Gulf Island. However, PSQ Holdings is 10.77 times more volatile than Gulf Island Fabrication. It trades about 0.1 of its potential returns per unit of risk. Gulf Island Fabrication is currently generating about 0.13 per unit of risk. If you would invest  246.00  in PSQ Holdings on September 28, 2024 and sell it today you would earn a total of  218.00  from holding PSQ Holdings or generate 88.62% return on investment over 90 days.

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

PSQ Holdings  vs.  Gulf Island Fabrication

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 weak basic indicators, PSQ Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Gulf Island Fabrication

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Island Fabrication are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Gulf Island demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PSQ Holdings and Gulf Island

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

The idea behind PSQ Holdings and Gulf Island Fabrication 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.