Correlation Between Palantir Technologies and Trade Desk
Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and Trade Desk 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 Trade Desk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Palantir Technologies and The Trade Desk, you can compare the effects of market volatilities on Palantir Technologies and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and Trade Desk.
Diversification Opportunities for Palantir Technologies and Trade Desk
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Palantir and Trade is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and Trade Desk go up and down completely randomly.
Pair Corralation between Palantir Technologies and Trade Desk
Assuming the 90 days horizon Palantir Technologies is expected to generate 1.35 times more return on investment than Trade Desk. However, Palantir Technologies is 1.35 times more volatile than The Trade Desk. It trades about 0.35 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.13 per unit of risk. If you would invest 4,000 in Palantir Technologies on August 25, 2024 and sell it today you would earn a total of 2,185 from holding Palantir Technologies or generate 54.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Palantir Technologies vs. The Trade Desk
Performance |
| Timeline |
| Palantir Technologies |
| Trade Desk |
Palantir Technologies and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Palantir Technologies and Trade Desk
The main advantage of trading using opposite Palantir Technologies and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palantir Technologies position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.| Palantir Technologies vs. SPARTAN STORES | Palantir Technologies vs. Retail Estates NV | Palantir Technologies vs. Canon Marketing Japan | Palantir Technologies vs. The Trade Desk |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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