Correlation Between Square and Palantir Technologies
Can any of the company-specific risk be diversified away by investing in both Square 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 Square and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Square Inc and Palantir Technologies, you can compare the effects of market volatilities on Square 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 Square with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Square and Palantir Technologies.
Diversification Opportunities for Square and Palantir Technologies
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Square and Palantir is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Square Inc and Palantir Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Square 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 Square Inc 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 Square i.e., Square and Palantir Technologies go up and down completely randomly.
Pair Corralation between Square and Palantir Technologies
Assuming the 90 days horizon Square is expected to generate 1.58 times less return on investment than Palantir Technologies. But when comparing it to its historical volatility, Square Inc is 1.57 times less risky than Palantir Technologies. It trades about 0.35 of its potential returns per unit of risk. Palantir Technologies is currently generating about 0.35 of returns per unit of risk over similar time horizon. 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Square Inc vs. Palantir Technologies
Performance |
| Timeline |
| Square Inc |
| Palantir Technologies |
Square and Palantir Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Square and Palantir Technologies
The main advantage of trading using opposite Square and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Square 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.| Square vs. Shopify | Square vs. BYD Company Limited | Square vs. PayPal Holdings | Square vs. Palantir Technologies |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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