Correlation Between Quest For and Pershing Square

Can any of the company-specific risk be diversified away by investing in both Quest For and Pershing Square 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 Quest For and Pershing Square into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Quest For Growth and Pershing Square Holdings, you can compare the effects of market volatilities on Quest For and Pershing Square 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 Quest For with a short position of Pershing Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quest For and Pershing Square.

Diversification Opportunities for Quest For and Pershing Square

-0.26

Correlation Coefficient

Quest For  Pershing Square

Very good diversification

The 3 months correlation between Quest and Pershing is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Quest For Growth and Pershing Square Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pershing Square Holdings and Quest For 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 Quest For Growth are associated (or correlated) with Pershing Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pershing Square Holdings has no effect on the direction of Quest For i.e., Quest For and Pershing Square go up and down completely randomly.

Pair Corralation between Quest For and Pershing Square

Assuming the 90 days trading horizon Quest For Growth is expected to under-perform the Pershing Square. But the stock apears to be less risky and, when comparing its historical volatility, Quest For Growth is 1.09 times less risky than Pershing Square. The stock trades about -0.21 of its potential returns per unit of risk. The Pershing Square Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  4,924  in Pershing Square Holdings on September 19, 2024 and sell it today you would lose (4.00) from holding Pershing Square Holdings or give up 0.08% of portfolio value over 90 days.

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

Quest For Growth  vs.  Pershing Square Holdings

Quest For Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quest For Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pershing Square Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pershing Square Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Pershing Square is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Quest For and Pershing Square

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

The idea behind Quest For Growth and Pershing Square Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.