Correlation Between Vulcan Energy and PSQ Holdings

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

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

Diversification Opportunities for Vulcan Energy and PSQ Holdings

0.75

Correlation Coefficient

Vulcan Energy  PSQ Holdings

Poor diversification

The 3 months correlation between Vulcan and PSQ is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Energy Resources and PSQ Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSQ Holdings and Vulcan Energy 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 Vulcan Energy Resources are associated (or correlated) with PSQ Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSQ Holdings has no effect on the direction of Vulcan Energy i.e., Vulcan Energy and PSQ Holdings go up and down completely randomly.

Pair Corralation between Vulcan Energy and PSQ Holdings

Assuming the 90 days horizon Vulcan Energy Resources is expected to generate 1.17 times more return on investment than PSQ Holdings. However, Vulcan Energy is 1.17 times more volatile than PSQ Holdings. It trades about 0.0 of its potential returns per unit of risk. PSQ Holdings is currently generating about -0.08 per unit of risk. If you would invest  291.00  in Vulcan Energy Resources on December 24, 2024 and sell it today you would lose (27.00) from holding Vulcan Energy Resources or give up 9.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Vulcan Energy Resources  vs.  PSQ Holdings

Vulcan Energy Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Energy Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vulcan Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PSQ Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PSQ Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Vulcan Energy and PSQ Holdings

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

The idea behind Vulcan Energy Resources and PSQ 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.