Correlation Between Confluent and Palantir Technologies

Can any of the company-specific risk be diversified away by investing in both Confluent 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 Confluent and Palantir Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Confluent and Palantir Technologies Class, you can compare the effects of market volatilities on Confluent 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 Confluent with a short position of Palantir Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Confluent and Palantir Technologies.

Diversification Opportunities for Confluent and Palantir Technologies

0.95

Correlation Coefficient

Confluent  Palantir Technologies

Almost no diversification

The 3 months correlation between Confluent and Palantir is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Confluent and Palantir Technologies Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palantir Technologies and Confluent 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 Confluent 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 Confluent i.e., Confluent and Palantir Technologies go up and down completely randomly.

Pair Corralation between Confluent and Palantir Technologies

Given the investment horizon of 90 days Confluent is expected to generate 3.58 times less return on investment than Palantir Technologies. In addition to that, Confluent is 1.04 times more volatile than Palantir Technologies Class. It trades about 0.04 of its total potential returns per unit of risk. Palantir Technologies Class is currently generating about 0.14 per unit of volatility. If you would invest  640.00  in Palantir Technologies Class on September 19, 2024 and sell it today you would earn a total of  6,511  from holding Palantir Technologies Class or generate 1017.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Confluent  vs.  Palantir Technologies Class

Confluent

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Confluent are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Confluent unveiled solid returns over the last few months and may actually be approaching a breakup point.

Palantir Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Confluent and Palantir Technologies

The main advantage of trading using opposite Confluent and Palantir Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Confluent 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.

The idea behind Confluent and Palantir Technologies Class pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.