Correlation Between PSQ Holdings and Vulcan Energy

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

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

Diversification Opportunities for PSQ Holdings and Vulcan Energy

0.31

Correlation Coefficient

PSQ Holdings  Vulcan Energy

Weak diversification

The 3 months correlation between PSQ and Vulcan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and Vulcan Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Energy Resources 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 Vulcan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Energy Resources has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and Vulcan Energy go up and down completely randomly.

Pair Corralation between PSQ Holdings and Vulcan Energy

Given the investment horizon of 90 days PSQ Holdings is expected to generate 2.79 times more return on investment than Vulcan Energy. However, PSQ Holdings is 2.79 times more volatile than Vulcan Energy Resources. It trades about 0.05 of its potential returns per unit of risk. Vulcan Energy Resources is currently generating about 0.08 per unit of risk. If you would invest  404.00  in PSQ Holdings on September 25, 2024 and sell it today you would lose (17.00) from holding PSQ Holdings or give up 4.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

PSQ Holdings  vs.  Vulcan Energy Resources

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

Vulcan Energy Resources

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with PSQ Holdings and Vulcan Energy

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

The idea behind PSQ Holdings and Vulcan Energy Resources 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.