Correlation Between PSQ Holdings and Republic Bancorp

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

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

Diversification Opportunities for PSQ Holdings and Republic Bancorp

0.32

Correlation Coefficient

PSQ Holdings  Republic Bancorp

Weak diversification

The 3 months correlation between PSQ and Republic is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and Republic Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Republic Bancorp 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 Republic Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Republic Bancorp has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and Republic Bancorp go up and down completely randomly.

Pair Corralation between PSQ Holdings and Republic Bancorp

Given the investment horizon of 90 days PSQ Holdings is expected to generate 13.5 times more return on investment than Republic Bancorp. However, PSQ Holdings is 13.5 times more volatile than Republic Bancorp. It trades about 0.09 of its potential returns per unit of risk. Republic Bancorp 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.  Republic Bancorp

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.

Republic Bancorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Republic Bancorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Republic Bancorp sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PSQ Holdings and Republic Bancorp

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

The idea behind PSQ Holdings and Republic Bancorp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.