Correlation Between Palantir Technologies and American Express
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and American Express 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 American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies Class and American Express, you can compare the effects of market volatilities on Palantir Technologies and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and American Express.
Diversification Opportunities for Palantir Technologies and American Express
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Palantir and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 Class are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and American Express go up and down completely randomly.
Pair Corralation between Palantir Technologies and American Express
Given the investment horizon of 90 days Palantir Technologies Class is expected to generate 3.15 times more return on investment than American Express. However, Palantir Technologies is 3.15 times more volatile than American Express. It trades about 0.4 of its potential returns per unit of risk. American Express is currently generating about 0.3 per unit of risk. If you would invest 4,156 in Palantir Technologies Class on September 1, 2024 and sell it today you would earn a total of 2,552 from holding Palantir Technologies Class or generate 61.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Palantir Technologies Class vs. American Express
Performance |
| Timeline |
| Palantir Technologies |
| American Express |
Palantir Technologies and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palantir Technologies and American Express
The main advantage of trading using opposite Palantir Technologies and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Palantir Technologies vs. Palo Alto Networks | Palantir Technologies vs. Adobe Systems Incorporated | Palantir Technologies vs. Crowdstrike Holdings | Palantir Technologies vs. Block Inc |
| American Express vs. 360 Finance | American Express vs. Atlanticus Holdings | American Express vs. Qudian Inc | American Express vs. Enova International |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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