Correlation Between Xtrackers ShortDAX and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Xtrackers ShortDAX 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 Xtrackers ShortDAX and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers ShortDAX and Palantir Technologies, you can compare the effects of market volatilities on Xtrackers ShortDAX 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 Xtrackers ShortDAX with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers ShortDAX and Palantir Technologies.
Diversification Opportunities for Xtrackers ShortDAX and Palantir Technologies
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xtrackers and Palantir is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers ShortDAX and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Xtrackers ShortDAX 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 Xtrackers ShortDAX 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 Xtrackers ShortDAX i.e., Xtrackers ShortDAX and Palantir Technologies go up and down completely randomly.
Pair Corralation between Xtrackers ShortDAX and Palantir Technologies
Assuming the 90 days trading horizon Xtrackers ShortDAX is expected to generate 12.62 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Xtrackers ShortDAX is 4.22 times less risky than Palantir Technologies. It trades about 0.12 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 4,000 in Palantir Technologies on August 25, 2024 and sell it today you would earn a total of 2,185 from holding Palantir Technologies or generate 54.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers ShortDAX vs. Palantir Technologies
Performance |
| Timeline |
| Xtrackers ShortDAX |
| Palantir Technologies |
Xtrackers ShortDAX and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers ShortDAX and Palantir Technologies
The main advantage of trading using opposite Xtrackers ShortDAX and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers ShortDAX 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 Xtrackers ShortDAX 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. LG Electronics | Palantir Technologies vs. PLAYTIKA HOLDING DL 01 | Palantir Technologies vs. Columbia Sportswear | Palantir Technologies vs. Electronic Arts |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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