Correlation Between Palantir Technologies and Uber Technologies
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Uber 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 Palantir Technologies and Uber Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and Uber Technologies, you can compare the effects of market volatilities on Palantir Technologies and Uber 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 Palantir Technologies with a short position of Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Uber Technologies.
Diversification Opportunities for Palantir Technologies and Uber Technologies
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Palantir and Uber is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and Palantir Technologies 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 Palantir Technologies are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Uber Technologies go up and down completely randomly.
Pair Corralation between Palantir Technologies and Uber Technologies
Assuming the 90 days trading horizon Palantir Technologies is expected to generate 1.9 times more return on investment than Uber Technologies. However, Palantir Technologies is 1.9 times more volatile than Uber Technologies. It trades about 0.43 of its potential returns per unit of risk. Uber Technologies is currently generating about -0.09 per unit of risk. If you would invest 8,350 in Palantir Technologies on August 31, 2024 and sell it today you would earn a total of 4,895 from holding Palantir Technologies or generate 58.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palantir Technologies vs. Uber Technologies
Performance |
| Timeline |
| Palantir Technologies |
| Uber Technologies |
Palantir Technologies and Uber Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palantir Technologies and Uber Technologies
The main advantage of trading using opposite Palantir Technologies and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, Uber 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.The idea behind Palantir Technologies and Uber 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.
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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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