Correlation Between Northern Data and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Northern Data 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 Northern Data and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and Palantir Technologies, you can compare the effects of market volatilities on Northern Data 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 Northern Data with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and Palantir Technologies.
Diversification Opportunities for Northern Data and Palantir Technologies
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Northern and Palantir is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Northern Data 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 Northern Data AG 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 Northern Data i.e., Northern Data and Palantir Technologies go up and down completely randomly.
Pair Corralation between Northern Data and Palantir Technologies
Assuming the 90 days trading horizon Northern Data is expected to generate 1.38 times less return on investment than Palantir Technologies. In addition to that, Northern Data is 1.16 times more volatile than Palantir Technologies. It trades about 0.08 of its total potential returns per unit of risk. Palantir Technologies is currently generating about 0.13 per unit of volatility. If you would invest 700.00 in Palantir Technologies on November 1, 2024 and sell it today you would earn a total of 6,982 from holding Palantir Technologies or generate 997.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Northern Data AG vs. Palantir Technologies
Performance |
| Timeline |
| Northern Data AG |
| Palantir Technologies |
Northern Data and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and Palantir Technologies
The main advantage of trading using opposite Northern Data and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data 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.| Northern Data vs. Samsung Electronics Co | Northern Data vs. Samsung Electronics Co | Northern Data vs. Berkshire Hathaway | Northern Data vs. Berkshire Hathaway |
| Palantir Technologies vs. SOEDER SPORTFISKE AB | Palantir Technologies vs. SAN MIGUEL BREWERY | Palantir Technologies vs. THAI BEVERAGE | Palantir Technologies vs. USWE SPORTS AB |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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