Correlation Between PSQ Holdings and PFIZER

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

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

Diversification Opportunities for PSQ Holdings and PFIZER

-0.39

Correlation Coefficient

PSQ Holdings  PFIZER

Very good diversification

The 3 months correlation between PSQ and PFIZER is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PSQ Holdings and PFIZER INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PFIZER INC 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 PFIZER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PFIZER INC has no effect on the direction of PSQ Holdings i.e., PSQ Holdings and PFIZER go up and down completely randomly.

Pair Corralation between PSQ Holdings and PFIZER

Given the investment horizon of 90 days PSQ Holdings is expected to generate 24.29 times more return on investment than PFIZER. However, PSQ Holdings is 24.29 times more volatile than PFIZER INC. It trades about 0.02 of its potential returns per unit of risk. PFIZER INC is currently generating about 0.01 per unit of risk. If you would invest  996.00  in PSQ Holdings on September 24, 2024 and sell it today you would lose (612.00) from holding PSQ Holdings or give up 61.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.16%
Values	Daily Returns

PSQ Holdings  vs.  PFIZER INC

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.

PFIZER INC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PSQ Holdings and PFIZER

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

The idea behind PSQ Holdings and PFIZER INC 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.