Correlation Between Capital One and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and Palantir Technologies, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Palantir Technologies.
Diversification Opportunities for Capital One and Palantir Technologies
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and Palantir is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and Palantir Technologies go up and down completely randomly.
Pair Corralation between Capital One and Palantir Technologies
Assuming the 90 days trading horizon Capital One is expected to generate 1.17 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Capital One Financial is 2.74 times less risky than Palantir Technologies. It trades about 0.16 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 15,450 in Palantir Technologies on November 3, 2024 and sell it today you would earn a total of 750.00 from holding Palantir Technologies or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Palantir Technologies
Performance |
| Timeline |
| Capital One Financial |
| Palantir Technologies |
Capital One and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Palantir Technologies
The main advantage of trading using opposite Capital One and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Metalurgica Gerdau SA | Capital One vs. STMicroelectronics NV | Capital One vs. UnitedHealth Group Incorporated | Capital One vs. Universal Health Services, |
| Palantir Technologies vs. Broadridge Financial Solutions, | Palantir Technologies vs. Tyson Foods | Palantir Technologies vs. Verizon Communications | Palantir Technologies vs. Unity Software |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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