Correlation Between Palantir Technologies and Verizon Communications
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Verizon Communications 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 Verizon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and Verizon Communications, you can compare the effects of market volatilities on Palantir Technologies and Verizon Communications 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 Verizon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Verizon Communications.
Diversification Opportunities for Palantir Technologies and Verizon Communications
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Palantir and Verizon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications 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 Verizon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Verizon Communications go up and down completely randomly.
Pair Corralation between Palantir Technologies and Verizon Communications
Assuming the 90 days trading horizon Palantir Technologies is expected to generate 2.66 times more return on investment than Verizon Communications. However, Palantir Technologies is 2.66 times more volatile than Verizon Communications. It trades about 0.14 of its potential returns per unit of risk. Verizon Communications is currently generating about 0.05 per unit of risk. If you would invest 1,122 in Palantir Technologies on September 19, 2024 and sell it today you would earn a total of 13,973 from holding Palantir Technologies or generate 1245.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Palantir Technologies vs. Verizon Communications
Performance |
| Timeline |
| Palantir Technologies |
| Verizon Communications |
Palantir Technologies and Verizon Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palantir Technologies and Verizon Communications
The main advantage of trading using opposite Palantir Technologies and Verizon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, Verizon Communications 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 Verizon Communications will offset losses from the drop in Verizon Communications' long position.| Palantir Technologies vs. Fundo Investimento Imobiliario | Palantir Technologies vs. LESTE FDO INV | Palantir Technologies vs. Fras le SA | Palantir Technologies vs. Western Digital |
| Verizon Communications vs. Paycom Software | Verizon Communications vs. Take Two Interactive Software | Verizon Communications vs. CM Hospitalar SA | Verizon Communications vs. Spotify Technology SA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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