Correlation Between PSQ Holdings and KKR Co

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

By analyzing existing cross correlation between PSQ Holdings and KKR Co LP, you can compare the effects of market volatilities on PSQ Holdings and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSQ Holdings and KKR Co.

Diversification Opportunities for PSQ Holdings and KKR Co

0.33

Correlation Coefficient

PSQ Holdings  KKR Co

Weak diversification

The 3 months correlation between PSQ and KKR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and KKR Co go up and down completely randomly.

Pair Corralation between PSQ Holdings and KKR Co

Given the investment horizon of 90 days PSQ Holdings is expected to generate 16.96 times more return on investment than KKR Co. However, PSQ Holdings is 16.96 times more volatile than KKR Co LP. It trades about 0.09 of its potential returns per unit of risk. KKR Co LP is currently generating about 0.09 per unit of risk. If you would invest  240.00  in PSQ Holdings on September 24, 2024 and sell it today you would earn a total of  144.00  from holding PSQ Holdings or generate 60.0% return on investment over 90 days.

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

PSQ Holdings  vs.  KKR Co LP

PSQ Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PSQ Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, PSQ Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

KKR Co LP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KKR Co LP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile forward-looking signals, KKR Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PSQ Holdings and KKR Co

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

The idea behind PSQ Holdings and KKR Co LP 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.