Correlation Between Citigroup and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Citigroup 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 Citigroup and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Citigroup and Palantir Technologies, you can compare the effects of market volatilities on Citigroup 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 Citigroup with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Palantir Technologies.
Diversification Opportunities for Citigroup and Palantir Technologies
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Citigroup and Palantir is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Citigroup 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 Citigroup 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 Citigroup i.e., Citigroup and Palantir Technologies go up and down completely randomly.
Pair Corralation between Citigroup and Palantir Technologies
Taking into account the 90-day investment horizon Citigroup is expected to generate 7.99 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Citigroup is 2.08 times less risky than Palantir Technologies. It trades about 0.06 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,960 in Palantir Technologies on August 29, 2024 and sell it today you would earn a total of 4,299 from holding Palantir Technologies or generate 219.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.66% |
| Values | Daily Returns |
Citigroup vs. Palantir Technologies
Performance |
| Timeline |
| Citigroup |
| Palantir Technologies |
Citigroup and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Citigroup and Palantir Technologies
The main advantage of trading using opposite Citigroup and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citigroup 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.The idea behind Citigroup and Palantir Technologies 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.| Palantir Technologies vs. Selective Insurance Group | Palantir Technologies vs. INSURANCE AUST GRP | Palantir Technologies vs. Universal Insurance Holdings | Palantir Technologies vs. HANOVER INSURANCE |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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