Correlation Between Air Products and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Air Products and Palantir Technologies 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 Air Products and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products and and Palantir Technologies, you can compare the effects of market volatilities on Air Products and Palantir Technologies 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 Air Products with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Palantir Technologies.
Diversification Opportunities for Air Products and Palantir Technologies
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Palantir is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Air Products and and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Air Products 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 Air Products and are associated (or correlated) with Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of Air Products i.e., Air Products and Palantir Technologies go up and down completely randomly.
Pair Corralation between Air Products and Palantir Technologies
Assuming the 90 days trading horizon Air Products and is expected to under-perform the Palantir Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Air Products and is 2.6 times less risky than Palantir Technologies. The stock trades about -0.34 of its potential returns per unit of risk. The Palantir Technologies is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 14,644 in Palantir Technologies on October 12, 2024 and sell it today you would lose (944.00) from holding Palantir Technologies or give up 6.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Air Products and vs. Palantir Technologies
Performance |
| Timeline |
| Air Products |
| Palantir Technologies |
Air Products and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Palantir Technologies
The main advantage of trading using opposite Air Products and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Palantir Technologies 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 Palantir Technologies will offset losses from the drop in Palantir Technologies' long position.| Air Products vs. Pure Storage, | Air Products vs. HCA Healthcare, | Air Products vs. Clover Health Investments, | Air Products vs. Cardinal Health, |
| Palantir Technologies vs. GP Investments | Palantir Technologies vs. Delta Air Lines | Palantir Technologies vs. Monster Beverage | Palantir Technologies vs. Synchrony Financial |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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