Correlation Between Raytheon Technologies and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Raytheon Technologies and Palantir 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 Raytheon Technologies and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Raytheon Technologies and Palantir Technologies, you can compare the effects of market volatilities on Raytheon Technologies and Palantir 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 Raytheon Technologies with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raytheon Technologies and Palantir Technologies.
Diversification Opportunities for Raytheon Technologies and Palantir Technologies
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Raytheon and Palantir is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Raytheon Technologies and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Raytheon 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 Raytheon Technologies are associated (or correlated) with Palantir Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palantir Technologies has no effect on the direction of Raytheon Technologies i.e., Raytheon Technologies and Palantir Technologies go up and down completely randomly.
Pair Corralation between Raytheon Technologies and Palantir Technologies
Assuming the 90 days trading horizon Raytheon Technologies is expected to generate 6.24 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Raytheon Technologies is 2.54 times less risky than Palantir Technologies. It trades about 0.05 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,345 in Palantir Technologies on September 3, 2024 and sell it today you would earn a total of 11,900 from holding Palantir Technologies or generate 884.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.4% |
| Values | Daily Returns |
Raytheon Technologies vs. Palantir Technologies
Performance |
| Timeline |
| Raytheon Technologies |
| Palantir Technologies |
Raytheon Technologies and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Raytheon Technologies and Palantir Technologies
The main advantage of trading using opposite Raytheon Technologies and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytheon Technologies position performs unexpectedly, Palantir 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 Palantir Technologies will offset losses from the drop in Palantir Technologies' long position.| Raytheon Technologies vs. Lockheed Martin | Raytheon Technologies vs. Northrop Grumman | Raytheon Technologies vs. General Dynamics |
| Palantir Technologies vs. Fundo Investimento Imobiliario | Palantir Technologies vs. Fras le SA | Palantir Technologies vs. Western Digital | Palantir Technologies vs. Clave Indices De |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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