Correlation Between PSQ Holdings and 191216DJ6

Can any of the company-specific risk be diversified away by investing in both PSQ Holdings and 191216DJ6 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 191216DJ6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PSQ Holdings and COCA COLA CO, you can compare the effects of market volatilities on PSQ Holdings and 191216DJ6 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 191216DJ6. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSQ Holdings and 191216DJ6.

Diversification Opportunities for PSQ Holdings and 191216DJ6

-0.33

Correlation Coefficient

PSQ Holdings  191216DJ6

Very good diversification

The 3 months correlation between PSQ and 191216DJ6 is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and COCA COLA CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A CO 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 191216DJ6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A CO has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and 191216DJ6 go up and down completely randomly.

Pair Corralation between PSQ Holdings and 191216DJ6

Given the investment horizon of 90 days PSQ Holdings is expected to generate 92.93 times more return on investment than 191216DJ6. However, PSQ Holdings is 92.93 times more volatile than COCA COLA CO. It trades about 0.09 of its potential returns per unit of risk. COCA COLA CO is currently generating about -0.19 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  140.00  from holding PSQ Holdings or generate 58.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.23%
Values	Daily Returns

PSQ Holdings  vs.  COCA COLA CO

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.

COCA A CO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COCA COLA CO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 191216DJ6 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PSQ Holdings and 191216DJ6

The main advantage of trading using opposite PSQ Holdings and 191216DJ6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PSQ Holdings position performs unexpectedly, 191216DJ6 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 191216DJ6 will offset losses from the drop in 191216DJ6's long position.

The idea behind PSQ Holdings and COCA COLA CO 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.