Correlation Between Palantir Technologies and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and PayPal Holdings 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 PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and PayPal Holdings, you can compare the effects of market volatilities on Palantir Technologies and PayPal Holdings 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 PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and PayPal Holdings.
Diversification Opportunities for Palantir Technologies and PayPal Holdings
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Palantir and PayPal is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings 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 PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and PayPal Holdings go up and down completely randomly.
Pair Corralation between Palantir Technologies and PayPal Holdings
Assuming the 90 days horizon Palantir Technologies is expected to generate 2.55 times more return on investment than PayPal Holdings. However, Palantir Technologies is 2.55 times more volatile than PayPal Holdings. It trades about 0.33 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.11 per unit of risk. If you would invest 4,179 in Palantir Technologies on August 29, 2024 and sell it today you would earn a total of 2,080 from holding Palantir Technologies or generate 49.77% 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 vs. PayPal Holdings
Performance |
| Timeline |
| Palantir Technologies |
| PayPal Holdings |
Palantir Technologies and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palantir Technologies and PayPal Holdings
The main advantage of trading using opposite Palantir Technologies and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Palantir Technologies vs. Selective Insurance Group | Palantir Technologies vs. INSURANCE AUST GRP | Palantir Technologies vs. Universal Insurance Holdings | Palantir Technologies vs. HANOVER INSURANCE |
| PayPal Holdings vs. Superior Plus Corp | PayPal Holdings vs. NMI Holdings | PayPal Holdings vs. Origin Agritech | PayPal Holdings vs. SIVERS SEMICONDUCTORS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |